Labour backs mansion tax to help low earners

Reuters/LondonThe leader of the opposition Labour Party has 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.With Labour ahead by up to 12% 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, its leader Ed 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 £2mn.“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 yesterday.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 Brown and the last Labour government,” he said, adding the move would benefit 25mn basic rate taxpayers. The idea of a mansion tax is also likely to appeal to the Liberal Democrats, 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,” Miliband said. “They are cutting taxes for one group this year. The very richest in society.”