Leading Conservative MPs are urging chancellor George Osborne to raise council tax on expensive homes as part of a deal with the Liberal Democrats that would see a cut in welfare benefits.
According to a report in the Financial Times, Treasury select committee chairman Andrew Tyrie (pictured) said it is “hard to justify on social or economic grounds” that the current cap on council tax bands allows owners of expensive central London homes pay the same as large suburban semi-detached homes.
Tyrie said: “My personal view is that the current system is regressive in the long-run and is increasingly difficult to justify. I am encouraging the chancellor to look at this.”
The Free Enterprise Group, a group of right wing Tory MPs, has also urged the chancellor to introduce new council tax bands.
FEG member Kwasi Kwarteng says: “The thinking behind this is we want to see a benefit freeze. That is the driving force behind any suggestion to do this.”
According to the FT, Deputy prime minister Nick Clegg said he would only support a cut in benefit payments if it were accompanied by higher taxation of expensive properties.
However, prime minister David Cameron blocked both a mansion tax and new council tax bands for expensive properties in the March budget, so he could prove a stumbling block.