The idea of a mansion tax was pushed to one side by the Treasury with that age-old excuse
that it would cost too much to implement, but could Ireland's new property tax show the UK that it is do-able?
The Lib Dems were all for a tax on properties worth over £2 million as a way to stick it to the wealthy but the idea was overruled by the Tory half of our government, members of which would presumably have to cough up for the tax.
One of the reasons given for failing to implement the mansion tax was cost. In a letter to Green party MP Caroline Lucas, Treasury minister David Gauke said a land value tax (LVT) would be too costly, and in his exact words 'an extensive undertaking and come at a significant cost to the exchequer'.
Why so costly? Well, Gauke goes on to explain: 'Prior to implementing a LVT, ownership of vast amounts of land would have to be identified and would require all properties to be registered by the Land Registry.'
He doesn't tell us the cost, or how much is too much. Also, I was slightly confused by the statement because I thought that all land ownership had to go via the Land Registry so all the information is there – if anyone can elaborate on this I'd be grateful.
But back to the cost issue: Gauke may have to eat his words, as the Republic of Ireland is implementing the property tax system and it's not that pricey.
The Irish scheme kicks off in March and will levy an annual charge, a bit like council tax in the UK but much cheaper. A total of 1.6 million households will receive letters detailing house price valuation, which of the 20 property tax bands they fall into and how much they will have to pay.
For homes less than €100,000 a charge of €90 a year will be levied, with the tax rising alongside property value.
The scheme is expected to raise €500 million in its first year at a cost of €25.9 million in 2013, plus an initial IT system outlay of €9 million. That's €35 million for a €500 million gain.
Cost is of course an issue but Ireland is proving that to accumulate you must speculate; it will be interesting to see whether Gauke looks over the Irish Sea and reconsiders his position – I'm sure the Treasury could do with the cash.