It can initially be very easy and rewarding to stick your head up above the parapet, until that is the bullets start flying the other way, as the Liberal Democrats are fast finding out.

Since Nick Clegg’s success just seven days ago the LibDem policies have had the spotlight thrown on them and the press are raking through the ashes of the party past in an attempt to find some dirt.

But it seems they needn’t have bothered as Alistair Carmichael, the LibDem Scottish affairs spokesman let this new property tax slip out yesterday.

The new tax it seems is a VAT levy of between 5% and 7% to be added to the cost of buying a new property. For an average price of £199,166 this comes to a figure of up to $14,000.

For buyers struggling to find a large enough deposit this will kill off their dreams unless the cost of houses tumbles by the same sort of figure. Then they’d go and buy a ‘used’ house anyway.

The LibDems are claiming that this tax will be tax-neutral over-all, that it is fair to place VAT on new homes so that it can be removed from being applied to renovation work on older houses.

The LibDems claim it is unfair to zero rate VAT for new build homes whilst charging VAT on work done to refurbish older houses. They also claim that where this has been done in other countries it has led to a boost for the construction industry.

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Tax neutral it may be, but such a massive change when the economy and especially the housing sector, is in such dire straits calls their judgment into question. There is little activity in the housing market anyway and this move will just make building and buying new homes unattractive. So who will build them? And how will we then meet our ‘green home’ EU requirements? We need new homes and lots of them, how can taxing them possibly help?


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