Clegg: Hit the rich with a new tax on big homes

Wealthy must pay more, says Lib Dem leader as he reveals plans for annual property levy

Nick Clegg is turning his fire on the super-rich, revealing proposals to hit owners of million-pound houses in the pocket under Liberal Democrat plans to overhaul the tax system.

In an interview with The Independent, he argued that the wealthiest in society had profited from soaring property prices and tax dodges. His solution is to make them pay their fair share, promising that the extra cash collected would be channelled back into tax cuts for low- and middle-income homes.

Under the scheme, to be detailed at the Lib Dem conference in Bourne-mouth today, £17.1bn a year would be raised by cutting reliefs that benefit the best-off. The cash would be used to raise the basic starting-point for income tax to earnings of £10,000 a year, removing four million workers from tax altogether.



The plans will be unveiled by Vince Cable, the Treasury spokesman. The boldest element is an annual levy of .5 per cent on a property's value above a threshold of £1m. This would mean additional tax of £2,500 a year on a home valued at £1.5m, or £15,000 a year on a house worth £4m.

"That is not a big sacrifice," said Mr Clegg. "It is a perfectly reasonable thing to ask of people who have got properties of that value, and it's completely in line with how pretty well every tax system in the world works." It was only just, he added, to require the people who had benefited most from the "rollercoaster of housing prices" to contribute a small fraction of the profits they had made.



"I think people who live in properties worth over £1m feel it's fair, in this day and age, to pay about £2,000 or less to help people for whom the tax burden is much higher."

The tax would hit hard in parts of London and the South-east, where property prices remain highest. The cash would be collected by local councils, with some £1.1bn raised from the estimated 250,000 properties worth £1m-plus that would be covered by the tax.

The Lib Dems are also calling for closing of the loophole that allows highest earners to dodge tax by paying themselves in shares. A tightening of the rules on capital gains tax aimed at the richest in society would raise £4.1bn more. Wealthy individuals who take some of their income as capital – typically City traders who are awarded shares – would be taxed at 40 per cent rather than the present 18 per cent.

The annual exemption for capital gains would be also cut from £10,000, a level which the Lib Dems say allows the best-off to move money around to avoid tax, to just £2,000. The party would levy national insurance on company "benefits in kind" paid to high-earners, such as private medical insurance or company cars, at present exempt from NI. "The captains of the universe in the City of London who have been raking in incomes through capital gains won't like this," said Mr Clegg. "But it's wrong, just morally wrong, that millions of people on lower incomes are subsidising people on high incomes."

The party leadership will also set out detailed plans to save £2.8bn a year from tackling schemes used by big business to avoid tax. It will include action against companies that set up complex corporate structures to side-step tax.

Mr Clegg insisted the moves were driven by a desire to tackle unfairness in the heart of the tax system. He said: "I actually think we have got a new mood which is not a punitive squeeze-the-pips-until-they-leave-the-country 1970s style, absolutely not.

"We celebrate success, we celebrate and support entrepreneurialism, people doing well, earning money. I have no problem with that. But I think everybody now in Britain recognises that one of the things that went wrong in the get-rich-quick, spend-today-don't care about tomorrow society that Labour presided over the last decade was that we didn't make Britain fair enough."

Mr Clegg said that, with a maximum of nine months to go to the next election, the party was more united and optimistic than for years. "I think the party senses that the next election isn't going to be just any old election. It's a very big election. I think people feel failed by Labour – that much is obvious – but they feel wholly unconvinced by this plastic, synthetic appeal from the Conservatives."

Start your day with The Independent, sign up for daily news emails
Sport
Super BowlAfter Katy Perry madness it's back to The Independent's live coverage of Super Bowl 49!
News
See what Twitter had to say about the first half of the Super Bowl
News
people
News
people
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: PMLD Teacher

Negotiable: Tradewind Recruitment: PMLD Teacher A specialist primary school i...

Recruitment Genius: Online Media Sales Trainee

£15000 - £30000 per annum: Recruitment Genius: Now our rapidly expanding and A...

Recruitment Genius: Public House Manager / Management Couples

£15000 - £20000 per annum: Recruitment Genius: Are you passionate about great ...

Recruitment Genius: Production Planner

£20000 - £30000 per annum: Recruitment Genius: This fast growing reinforcing s...

Day In a Page

The super-rich now live in their own Elysium - they breathe better air, and eat better food, when they're not making beans on toast for their kids

The super-rich now live in their own Elysium

They breathe better air, eat better food, take better medicine
A generation of dropouts failed by colleges

Dropout generation failed by colleges

£800m a year wasted on students who quit courses before they graduate
Entering civilian life 'can be like going into the jungle' for returning soldiers

Homeless Veterans appeal

Entering civilian life can be like going into the jungle
Sam Taylor-Johnson: Woman on top

Sam Taylor-Johnson: Woman on top

Fifty Shades of Grey director on bringing the hit to the screen
Shazam! Story of the $1bn 'what's that song?' app

Shazam: Story of the $1bn 'what's that song?' app

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch