Miliband's 10p/Mansion tax proposal doesn't add up

Setting out what at first glance seemed like concrete ideas of what the Labour party would offer voters at the next election. Ed Miliband said a Labour government would introduce a tax on houses worth over two million pounds. "We would use the money raised by a mansion tax to reintroduce a lower ten pence starting rate of tax, with the size of the band depending on the amount raised," He conceded that the former Labour government had been wrong to abolish the ten pence starting rate of income tax. "We would put right a mistake made by Gordon Brown and the last Labour government," he said. Both Ed Miliband and Ed Balls were members of the last government, Ed Balls was Economic Secretary to the Treasury when the 2007 announcement to abolish the ten pence rate was made.

However this is not the first time the  Labour party have welcomed the Mansion Tax, which is a proposal put forward by the Liberal Democrats at the twenty ten election. The Shadow Chancellor Ed Balls told the BBC's Nick Robinson on March third last year that "any money raised by a mansion tax should be spent on reversing cuts to tax credits". 

So having spent the money once the Labour party are trying to spend it again. They have also got a problem with their figures. The mansion tax by independent analysts would raise between one and two billion pounds a year. The reintroduction of the ten pence rate would cost the Treasury seven billion pounds. Even if you are generous to the Labour party, give them back the mansion tax money which they pledged to use last year and you put the estimate at the higher level there would still be a five billion pound black hole in the proposal which they haven't said how they'll fill it.

Commenting on Ed Miliband’s speech on the economy, Liberal Democrat Chief Secretary to the Treasury, Danny Alexander said: “The two Eds are rather late to the party, wanting to cut taxes for those on low and middle incomes. After 13 years in Government, the only action Ed Balls took was to raise the amount of tax those on low incomes paid by abolishing the 10p rate. It was the biggest tax mistake they ever made and it has taken them until now to realise their error."

Continuing Mr Alexander said: "The best way to cut taxes for those on low incomes is take them out of tax altogether. That is why Liberal Democrats in Government are raising the Personal Allowance. From April, nearly 25m people will get a further Income Tax cut so they will be £600 a year better off than under Labour. Labour had 13 years in Government to make property taxes fairer by introducing the Liberal Democrat policy of a Mansion Tax. With the Liberal Democrats in Government the wealthy are paying more in each year of this Parliament compared to any under Labour."