mocrat leader Nick Clegg has announced a major reversal of the party's 'mansion tax' proposal, as part of a package of reforms he termed the 'most radical' in a generation.
Under the new plan, any property worth at least £2 million will face an annual duty of one per cent. The party had originally proposed a 0.5 per cent tax on a property's value over £1 million.
Vince Cable, the party's economic spokesman, came under fire when the so-called 'mansion tax' was announced at the party conference in September. Colleagues alleged that he had failed to consult them sufficiently, and warned it could damage their election prospects.
On Monday Mr Clegg claimed that what the party unveiled in September was merely the 'principle' of the reform. He termed a mansion tax part of a 'simple, fair, do-able plan', and said it would satisfy 'what many people want from the tax system'.
By raising the threshold under which a home would qualify for the tax, the party estimates 180,000 fewer homes will be targeted. The revenue raised from this levy would allow the Liberal Democrats to abolish income tax for those with an income under £10,000.
However, opinion towards the mansion tax concept has been mixed. Veteran Financial Times columnist Martin Wolf called the original proposal 'the germ of an excellent idea', while the Conservatives attacked it as 'unravelling' and 'unworkable'.
The tax's political implications remain unclear. A BBC poll conducted in September showed 69 per cent supported the concept. Liberal Democrat candidates for more affluent seats, however, are worried the proposal may lose them votes. One such constituency is Richmond Park, where Liberal Democrat Susan Kramer faces a strong challenge from Conservative millionaire Zac Goldsmith.
Mr Clegg was keen to emphasise yesterday morning that 'there is no such thing as tax cuts for free'. The mansion tax is only part of a broader set of reforms including harsher penalties on polluters and closing tax loopholes. With the November Ipsos MORI poll showing Liberal Democrat support eroding further, Mr Clegg will be hoping this announcement gives the party a much-needed lift.
Under the new plan, any property worth at least £2 million will face an annual duty of one per cent. The party had originally proposed a 0.5 per cent tax on a property's value over £1 million.
Vince Cable, the party's economic spokesman, came under fire when the so-called 'mansion tax' was announced at the party conference in September. Colleagues alleged that he had failed to consult them sufficiently, and warned it could damage their election prospects.
On Monday Mr Clegg claimed that what the party unveiled in September was merely the 'principle' of the reform. He termed a mansion tax part of a 'simple, fair, do-able plan', and said it would satisfy 'what many people want from the tax system'.
By raising the threshold under which a home would qualify for the tax, the party estimates 180,000 fewer homes will be targeted. The revenue raised from this levy would allow the Liberal Democrats to abolish income tax for those with an income under £10,000.
However, opinion towards the mansion tax concept has been mixed. Veteran Financial Times columnist Martin Wolf called the original proposal 'the germ of an excellent idea', while the Conservatives attacked it as 'unravelling' and 'unworkable'.
The tax's political implications remain unclear. A BBC poll conducted in September showed 69 per cent supported the concept. Liberal Democrat candidates for more affluent seats, however, are worried the proposal may lose them votes. One such constituency is Richmond Park, where Liberal Democrat Susan Kramer faces a strong challenge from Conservative millionaire Zac Goldsmith.
Mr Clegg was keen to emphasise yesterday morning that 'there is no such thing as tax cuts for free'. The mansion tax is only part of a broader set of reforms including harsher penalties on polluters and closing tax loopholes. With the November Ipsos MORI poll showing Liberal Democrat support eroding further, Mr Clegg will be hoping this announcement gives the party a much-needed lift.
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