Ed Miliband conference speech
Ed Miliband, the leader of the Labour party, will tax homes worth more than £2m if he wins the 2015 general election.Reuters

Ed Miliband has reiterated his party's support for a "mansion tax" on properties worth more than £2m, but his critics have called it "bizarre" and "arbitrary".

The Labour Party leader said he would bring in the levy if he wins the general election in 2015. Miliband was giving a speech at Labour's annual conference in Manchester.

Proceeds would be used to fund investment in the NHS, such as the hiring of thousands of new nurses, GPs and care staff, a move likely to play well with voters who are worried about the current state of the health service. The details of how the tax would work have yet to be revealed.

Using a mansion tax to fund the NHS is a shift in policy from Miliband, who had previously promised in 2012 to use the revenue to cut taxes for working people.

"Labour's proposal to tax expensive houses and hypothecate the funds for the NHS is bizarre," said Ben Southwood, the head of policy at free market thinktank the Adam Smith Institute (ASI).

"Although property value taxes are among the least inefficient taxes, and shifting the burden from costlier taxes like stamp duty land tax, corporation tax and income tax is a good idea, we already have a perfectly good property tax system: council tax.

"The only problem with the council tax system is that, for political reasons, it has not been revalued since 1993, massively distorting the system.

"It makes no sense to create a whole new property tax system at an arbitrary £2m cutoff point: instead, council tax should be revalued and remodeled along more progressive lines, to reduce the tax burden on people in less expensive properties."

Another problem is that those living in London, where house prices are far higher on average than the rest of the UK, may be asset rich because of the value of their property, but are not necessarily cash wealthy.

And some argue that a mansion tax could damage the recent recovery in the UK housing market.

"The only spanner in the works for the UK housing market now could be undue government interventions," said Peter Rollings, CEO of estate agency Marsh & Parsons.

"Labour's mansion tax proposals would not only injure London's international reputation and prestige as a city open for business and investment, but would lumber the capital's homeowners with an even weightier tax burden and potentially stifle the market.

"Any policy initiatives should concentrate on nurturing the embryonic buds of growth outside of London, rather than drastically pruning back healthier branches of the market."

Proponents of a mansion tax say it is simply a tax on unearned wealth.