People owning homes worth £1m or more could face a new "wealth tax

12.40.27pm UTC (GMT +0000) Sat 3rd Mar 2007

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.

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."