UK (Parliament Politics Magazine) – UK PM Keir Starmer’s chief of staff, Morgan McSweeney’s think tank, Labour Together, say mansion taxes should fund public transport and infrastructure.
As reported by The Telegraph, Labour Together recommended taxing mansions in wealthy areas to fund public transport schemes.
Morgan McSweeney’s think tank urged that mayors, including Sadiq Khan, be given authority over high-value property taxes.
What did Labour Together say about mansion taxes and infrastructure funding?
According to the Labour Together report, city halls should be allowed to levy French-style employment taxes to fund infrastructure projects.
The move comes as Chancellor Rachel Reeves considers new property taxes to fill a £50bn gap in the upcoming Budget.
Insiders say the Chancellor may introduce a mansion tax on homes worth more than £2m and an annual levy on properties above £500,000.
The think tank said the Treasury should allow regional leaders greater powers to raise taxes for infrastructure. It stated that these should include
“a new proportional tax that mayors can impose on the excess of a house’s value above a certain threshold”.
According to the report, city finances should be allowed to impose minor payroll taxes and adjust the council tax. It said giving wealthy urban areas more financial powers could fund local public transport improvements. This would allow more central government funds from general taxation to be directed to infrastructure in poorer areas.
The report stated,
“Richer areas like London should have the powers and incentives to fund their own infrastructure, freeing up central government funding for the parts of the country that can’t yet stand on their own two feet.”
It said,
“London should have the toolkit that a city like Paris has to tax the businesses and households that will benefit from new infrastructure.”
The think tank urged ministers to impose a windfall tax to capture land value gains after planning permission. It called for major cities to set up development corporations to raise market funds for infrastructure improvements.
Mr McSweeney, NuNumber 10mber 10’s influential chief of staff, was behind the think tank, which is closely linked to the Prime Minister and Chancellor.
Jonathan Ashworth, who served in the shadow cabinet, led the think tank until July before losing his seat to a pro-Gaza opponent.
The think tank’s report, published last month, raised worries that Ms Reeves is planning property and wealth taxes to support public finances.
The Chancellor has not ruled out adding new council tax bands to charge more on valuable homes.
How did Paris fund its infrastructure, and could UK cities do the same?
Paris imposes a three per cent tax on employees’ gross salaries, collected from businesses, raising around £6bn annually.
The payroll tax, introduced in the 1970s, initially upgraded the city’s transport systems but now mainly funds their operation and maintenance.
The French capital levies a nightly tourist tax of up to 15 euros, funding infrastructure, while retaining significant control over parking charges.
Mayors in Liverpool, Manchester, London, Birmingham and Leeds seek approval for French-style levies from Ms Reeves.
What did the Government say about mayors’ new tax powers?
A Government spokesman stated,
“Decisions on tax policy are for the Chancellor to make at the Budget. Mayors are already getting new powers to spend cash more flexibly so they can improve public services and invest in education.”
They added,
“We’re kickstarting economic growth in partnership with them, so people in every part of the country have more money in their pockets.”
What did Simon Gerrard say about the mansion tax plan?
Simon Gerrard, chairman of Martyn Gerrard Estate Agents, has warned that Labour’s proposed mansion tax could hit London homeowners with over ten years with “eye-watering” bills.
He stated,
“Meanwhile, those who are actually wealthy know how to bypass these moves and won’t pay it.”
Mr Gerrard said,
“After the deadline passes, people will simply not sell their homes. The property market above the threshold will die until Labour are voted out and the policy is repealed under a more sensible government.”
What did Laith Khalaf say about the mansion tax impact?
Laith Khalaf, head of investment analysis at AJ Bell, says homeowners value the tax-free status of primary residences.
He warned,
“A mansion tax set at a high level would naturally cause people to worry it was just the thin end of the wedge, and the next time the government needs a bit of money they could just lower the threshold.”
Mr Khalaf added,
“It would also be an impediment to mobility in the housing market, as those with properties which might fall foul of the tax would be inclined to sit on them for longer, leaving a log jam in the housing ladder below them.”
What did the Treasury spokesman say about taxes and public finances?
A Treasury spokesman stated,
“The best way to strengthen public finances is by growing the economy, which is our focus. Changes to tax-and-spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn.”
They added,
“We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s Budget we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.”
Key facts about the mansion tax
Mansion tax is a one-time levy on high-value properties, varying by location. It is applied in places like New York, New Jersey, Los Angeles, and Washington, D.C., but not in the U.K.
The tax aims to raise public revenue and target wealthier buyers. However, it can slow luxury property sales and reduce market mobility.