Labour peer Lord Mandelson has branded his party’s mansion tax proposals “crude” and given his backing to a Liberal Democrat policy instead.
Speaking on Newsnight last night, the former cabinet minister under Tony Blair said rather than “clobbering people” with Labour’s proposed tax on properties over £2m, he preferred the Lib Dem idea of adding new council tax bands.
The mansion tax is one of Labour’s key election promises and would introduce a new £250 monthly charge on homes worth between £2m and £3m, with higher rates for properties worth more. It plans to use the cash to fund NHS recruitment and the reinstatement of the 10p tax band.
But Mandelson said the tax is not the right way to address growing wealth inequality.
He said: “We don’t have an efficient way of taxing property in Britain.
“I don’t happen to think the mansion tax is the right policy response to that, I think it’s crude, I think it’s short-termist.
“What we need is what I think the Liberal Democrats are proposing and that is the introduction of further bands that relate to different values of property within the council tax system. That’s what I would like to see.
“It will take longer to introduce, that’s true, but it will be more effective and efficient in the long term than just sort of clobbering people with a rather sort of crude, short-term mansion tax.”
Though originally supportive of the mansion tax concept, the Lib Dems have since pushed for a review of the existing council tax bands and the addition of new bands above £2m.
The Conservatives unveiled plans for reform of the stamp duty system in the Autumn Statement.