February 14, 2013 / 11:09 AM / 5 years ago

Labour backs mansion tax to help low earners

LONDON (Reuters) - The leader of the Labour Party, Ed Miliband, called for a “mansion tax” on the wealthy and a new lower income tax band as he stepped up his attempt to cast Prime Minister David Cameron as a ruler for the rich.

Britain's opposition Labour Party leader Ed Miliband delivers a speech entitled "One Nation Labour: The Party of Change" at the Fabian Society conference in London January 12, 2013. REUTERS/Suzanne Plunkett

With Labour ahead by up to 12 percent in the polls at a time when Cameron’s coalition government is pushing through deep austerity measures to try to reduce a large budget deficit, Miliband is keen to establish his party’s economic credibility ahead of the next election in 2015.

Setting out some of the first concrete ideas of what his party would offer voters, Miliband said a Labour government would introduce a tax on houses worth over 2 million pounds.

“We would use the money raised by a mansion tax to reintroduce a lower 10 pence starting rate of tax, with the size of the band depending on the amount raised,” he said in a speech in Bedford on Thursday.

Cameron’s Conservative-led coalition has sought to remind voters whenever it can that it was the previous Labour government, of which Miliband was a member, that left the country with a record budget deficit.

Miliband has tried to distance himself from the policies of ex-Labour prime ministers Gordon Brown and Tony Blair, and conceded the former Labour government had been wrong to abolish the 10 pence starting rate of income tax he was proposing reinstating.

“We would put right a mistake made by Gordon Brown and the last Labour government,” he said, adding the move would benefit 25 million basic rate taxpayers.

The idea of a mansion tax is also likely to appeal to the Lib Dems, junior partners of the Conservatives in the ruling coalition, who proposed a similar idea before the 2010 election.

In his speech, Miliband again sought to label Cameron - who hails from an unusually privileged background - as a premier who rules for the rich, expecting everyone else to soak up the pain of austerity.

It is a charge that the government rejects. It says it has cut taxes and capped welfare payments, and has limited room for manoeuvre because of the poor state of the public finances it inherited from Labour.

“This April, people earning over a million pounds a year will get an average tax cut of 100,000 pounds,” Miliband said. “They are cutting taxes for one group this year. The very richest in society.”

Editing by Mike Peacock and Michael Holden

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