Political

Vince Cable sets out how taxes can be used to cut inequality

In an interview with The Observer, new Lib Dem leader Vince Cable has set out his approach to taxation, including a fondness for land taxes:

Vince Cable has signalled he will examine radical new taxes on wealth to ease inequality in Britain…

[He] said he wanted to look at ideas such as aligning capital gains tax with income tax to ensure the richest pay more.

The former business secretary also said he was interested in exploring the concept of a land value tax, which would see an annual levy placed on properties according to the size of their plot…

He hinted he would put greater emphasis on his past support for adding more council tax bands to cover expensive homes, but stopped short of reviving his “mansion tax” idea. “We didn’t make a big deal of this in this election, but in previous elections – and I think I would like to – [we have backed] reforming the council tax system so it’s more of a tax on property value.

“What happened [with the mansion tax] was that that language put a lot of people off: they felt it was attacking people who live in wealthy houses even though they are old ladies who don’t have much of an income. But the idea of reforming council tax bands was something we campaigned on in government and there is a continuing case for it.”

He said the idea of an annual land value tax, in place of business rates in the first instance, could be something he would look at.

“A good place to start is by replacing the system of commercial rates with something based on land values,” he said. “That would be a good place to try it out, experiment, see what the valuation problems are, if any. So let’s try it out. The principle is a good one.”

It’s worth adding that these ideas are very much in line with the previous direction of Liberal Democrat tax policy, such as the non-mansion tax and previous moves to bring taxes on income and capital more closely together. What’s however is looking different on these early signs is Vince Cable’s ability to secure helpful media coverage for them.

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