Liberal Democrats reform "mansion tax" proposal

The policy was originally announced this year at the Lib Dem party conference by Treasury spokesman Vince Cable. However the proposal received an angry reaction from senior Lib Dems who felt that they had not been consulted before the policy was announced.

One senior Liberal Democrat was reported as calling the proposal “codswallop” at the time. Mr Cable apologised for the way the announcement was handled but stuck by the policy.

Under the policy anyone with a home worth more than £1 million would be taxed 0.5 per cent of the value of the property. The proposed policy has now been revised to a one per cent tax on properties over £2 million.

The Lib Dems claim that the tax will allow the party to exempt four million people earning £10,000 or less from income tax, should they ever be elected.

The Liberal Democrat leader, Nick Clegg, told the BBC this morning, “What we specifically did was we looked at the figures, we looked at how many properties would be affected and we discovered that if the mansion tax applies to all properties above £2 million and we apply a one per cent levy... it would actually raise a bit of extra money.”

He added that the policy was aimed at making the tax system fairer.

The, third party, Liberal Democrats will almost certainly not win at next year’s general election. However a recent poll showed the Conservative party’s lead over Labour narrowing significantly, prompting speculation that there could be a hung parliament in which the Lib Dems could hold considerable influence.