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Last Updated: Saturday, 3 March 2007, 11:41 GMT
Lib Dems consider 1m homes tax
By Brian Wheeler
Political reporter, BBC News, Lib Dem spring conference, Harrogate

Vince Cable
Mr Cable wants to target the super-rich
People owning homes worth 1m or more would face a new "wealth tax" under plans being considered by the Lib Dems.

Treasury spokesman Vince Cable wants to hit "obscenely large" property investments and believes an annual 1% levy could be the solution.

The estimated 1bn return would be used to cut inheritance tax and stamp duty bills for the less well off.

The proposals were announced in a speech at the party's spring conference in Harrogate.

The Lib Dems dropped their flagship 50% top tax rate policy after the 2005 general election in favour of taxes on pollution.

But Mr Cable said it was time to take action to help middle income families.

'Super rich'

Setting out his plans to tackle "extremes of wealth", Mr Cable said: "One issue we are looking at in particular is the obscenely large property investments being made by Britain's new super rich.

"Britain's richest billionaire, and Labour donor, Mr Lakshmi Mittal recently stumped up 35m for a new house.

"But even he has been put in his place by an 84m flat in Park Lane.

"The owners of these properties probably pay no more tax in Britain than council tax which, for these residences, is about the same as is paid by a pensioner couple in a decent-sized suburban bungalow.

"By contrast, those middle income British pensioners, when they die, can now expect to bequeath their families a large inheritance tax bill," Mr Cable said.

"The super rich don't have to worry about such nuisances since they will have organised a tax avoidance dodge through a trust.

"I am determined that, through our further work on tax, we shall have a strong message of support, through tax cuts, for those of modest means who are being dragged into inheritance tax and higher rate stamp duty and ensure that these tax cuts are paid for by the very wealthy."

'Credit boom'

The party is looking at ways to force the best-off to pay more as part of a radical tax package agreed at its major annual conference in September.

Mr Cable also accused Labour of presiding over an explosion in credit card debts "close to the level at the peak of the last, disastrous Tory credit boom".

He said Chancellor Gordon Brown had "bottled out" of a confrontation with the High Street banks over their "excess profits", as highlighted in a report six years ago by the head of the London Stock Exchange.

"The banks have been running rings round him and ripping off their customers ever since," he told delegates.

"It is time Gordon Brown started sticking up for consumers.

"He can start by acknowledging that the growth in debt financed consumer spending he has presided over has left millions with their future mortgaged."

Private equity

Mr Cable also launched a stinging attack on "corporate predators" in the private equity industry, joining union calls for a crackdown.

"Dozens of healthy companies are being devoured by sharp-toothed corporate predators misleadingly described as 'private equity' - misleading since they are high leveraged with little equity and a lot of debt," he said.

"Private owners have borrowed heavily and enjoy generous and expensive tax relief on interest payments.

"Companies that have none of the transparency and accountability of public companies are taking over supermarkets, water utilities or football clubs.

"They know little about the underlying businesses they acquire, strip out the assets and other easy pickings, and move on leaving their prey saddled with debt.

"A Chancellor who was more concerned with guarding the public finances rather than telling us how to be British would crack down hard on the tax privileges of the private equity firms."

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