It has been revealed that Labour is secretly considering plans to impose a ‘triple tax whammy’ on property owners, should it form a Government next year. The proposals for a multi-billion-pound package of 'property wealth taxes' would disproportionately affect London and Southern England, if they went ahead. Chelsea and Fulham would be particularly badly affected as it has some of the highest property and land values in the country, but the homes are not always inhabited by people with high incomes.
The new taxes are discussed in a Labour Party policy review commissioned by Ed Miliband, and authored by Bill Grimsey, a former boss of the Wickes DIY chain. It was marked ‘very sensitive’, but was leaked to national newspapers this week. It is understood that the plans are to be discussed next month at the top levels of the Labour Party, in a meeting scheduled between Mr Grimsey, Ed Miliband and Shadow Business Secretary Chuka Umunna.
If the recommendations were adopted, and Labour were to win power in next year’s General Election, then it would mean:
- • All shop owners would be forced to pay a new ‘property owner’s tax’ separate from existing business rates - even if they don't run the shop, and on top of their existing taxes.
- • Business rates would be shaken up to scrap the current rule under which all firms pay the same level of rates based on the value of the properties they occupy, and instead would immediately increase the level in prosperous areas (mainly the South) – and slashed in less prosperous areas (mainly the North) to provide extra funds to struggling towns.
- • A new £500 million ‘farm tax’ would be introduced by scrapping the exemption from business rates that has applied to agricultural land and buildings since 1929.
- • As controversial, the report says that Labour should backdate the changes by two months to March, if it wins power next May.
According to Mr Grimsey, the intention behind the proposals is to tackle ‘geographical unfairness’, but they would have the biggest effect on properties with the highest values, such as those in Chelsea and Fulham. Moreover, they would not be linked to any apparent ability to pay the new taxes.
Responding to the reports, Chelsea and Fulham MP Greg Hands said: “I am deeply worried by these proposals, and particularly by the fact that my constituents and local businesses owners would be some of the hardest hit in the country. All taxes need to have some assessment of the ability to pay them.
“Ed Miliband doesn’t make any sense; he is always talking about cutting the cost of living, and yet if shops and farms have to pay more tax, shopping bills will go up.
“The economy is starting to grow, but these are the early stages of the recovery. This clutch of new taxes would hit business hard and put the recovery at risk. Instead of penalising those who are doing well, Mr Miliband should focus on helping others learn from their success. Labour has no ideas other than taxing and spending more."