Ahead of the next government budget the rumours are that Boris Johnson has been considering the introduction of a mansion tax. The idea is simple; tax those with large houses to fund infrastructure spending in the Midlands and the North. This would play into the script that Boris Johnson used to in the general election and potentially place yet another nail in the coffin of the current Labour party set up.
Does this make sense?
It does sound bizarre that we are talking about a Conservative government looking to introduce a mansion tax which would hit the wealthy of society. This despite the fact that back in 2015 the former Labour leader Ed Miliband was widely considered to have lost the election partly because of talk about a mansion tax. Fast forward to December 2019 and the controversial Shadow Chancellor John McDonnell cut down talk of a mansion tax policy, which even he considered to be “too radical”. So, is Boris Johnson playing games or does he really intend to tax the rich?
What is on offer?
It would seem there are two different proposals on the table which would create an annual recurring revenue stream. These are:-
• An annual levy on high-value homes
• The introduction of a higher level of council tax for more expensive properties
At first glance this seems to go against the trend of the Conservative party and what it stands for. It could potentially alienate core voters while potentially shoring up those in and around the red wall which was smashed at the last election. However, could the Conservative party have another agenda?
More recent rumours
Slowly but surely new rumours have been emanating from Number 10 that Boris Johnson has now decided against the idea of introducing a mansion tax. If this is correct then this could end up as a positive double whammy for the UK government. On one hand, the original rumours suggest that he was taking seriously the potential to introduce a mansion tax, a tick for former Labour supporters. On the flipside, the core Tory supporters will feel as though they have been listened to and this could firm up traditional Conservative support.
As we have seen in the past, high profile government budgets tend to attract some of the more bizarre rumours and counter rumours. We know from history that governments of the day will initially start with a huge list of potential taxes and slowly but surely cut these down. This may well be what is happening at the moment or it could be yet more manipulation of the wider media via the less subtle “leaks” route.
Summary
The idea of taxing the rich to pay for infrastructure spending in the Midlands and the North of England will resonate with many former Labour voters. Whether Boris Johnson will have the nerve to go through with this, potentially alienating property investors and core Tory voters remains to be seen. He does have a history of “playing games” with the press with leaks and counter leaks emerging from Number 10 on an almost daily basis. Property investors had hoped the introduction of Boris Johnson would represent the nadir of the suffocating tax burden on the UK property sector. It remains to be seen what the government actually has in store.