Mansion Tax Muddle is Typical of the Lib Dems

• Lib Dem tax plans

Key points

• The Lib Dem proposals are in a muddle and their sums don't remotely add up.
• Following a campaign by Lib Dem MPs in wealthier London suburbs, the Lib Dems now say they would raise their mansion tax threshold from £1m to £2m.
• The Lib Dems have been unable to convincingly say how they'll work out the value of people's homes that aren't being sold. The available figures on sales show relatively small number of houses worth over £2m. According to the latest Land Registry figures, there were just 86 properties in the whole of England and Wales that were bought for £2m or more (July 2009)
• Sarah McCarthy-Fry MP, Labour's Exchequer Secretary to the Treasury, said:
  
  "Their mansion tax muddle is typical of the Lib Dems. Because they are trying to face both ways, their plans keep falling apart.
  
  "They've made a complete mess of costing their proposals. The only thing that is consistent is that their sums don't add up."
  
  
• Looking at the detail of Lib Dem proposals, it's clear they are in a muddle and their sums don't remotely add up:

• Raising Personal Allowances to £10k: The Lib Dems have underestimated the cost of their headline tax policy by over £5bn. They have claimed this costs only £16.5 billion. But figures already available on the Treasury website show that increasing the personal allowance from around £6500 to £10,000 next year would cost over £22bn (i.e. each £100 rise costs £650m for tax year 2010/11)
• The Lib Dems claim they could save £5bn from closing loopholes, but these figures are just plucked from the air. Even Vince Cable admitted at the press conference today, they were just hunches.
• The Lib Dems say they would raise £2.2bn from replacing Air Passenger Duty with a per plane tax. But Budget 2009 (p154) shows that switching back to this proposal would raise only another £190m next year. The Government announced it would switch from the Aviation Duty' single plane tax that it consulted on to the Four-Band Air Passenger Duty that came into effect on 1 November 2009. The Lib Dems seem to have missed this.