One of the Labour Party’s biggest backers has slammed Ed Miliband’s marquee policy to bring in a mansion tax on properties worth more than £2million.
John Mills, who gave the party £1.65m last year, openly criticised the proposals in an interview with the Huffington Post.
“The problem with the mansion tax – apart from issues of whether it’s fair or going to work – is it requires really tricky valuations,” said Mr Mills, the chairman of consumer goods company JML.
“It’s a step from zero to some quite large number which is going to produce all sorts of problems on the boundary. If people have got mortgages, they could get into negative equity. There are these sorts of problems as well.”
The mansion tax, which would be used to fund an increase in NHS spending, has encountered a great deal of opposition since the Labour Party Conference – particularly from estate agents, who fear it could hit those who are asset-rich but cash-poor
But the increasingly hostile reception from Labour’s own grandees is an added blow for the party leadership.
Mr Mills said that reforming council tax on larger properties might be a better option.
“I have never really quite understood what the problem is with expanding the rate-bands because the top band is where really the amount you pay per year in relation to the value of the property is pretty low and I thought you’d extend those rate bands by two or three relatively easily.”
This is in fact the policy that the Liberal Democrats are now looking to implement, with an announcement this week that they would introduce new bands at the top end of council tax.
The Lib Dems had been the first party to advocate the £2m mansion tax, which later found favour with Labour’s policymakers.
Now their leader Nick Clegg has admitted that a fixed levy could be too “crude” a way of raising revenue and that reforming the council tax system would be more efficient.