Nick Clegg has not given up taxing expensive homes

Budgets usually have a sting in the tail, but it is unusual for a senior minister to point it out. Yet after a coded allusion to his mansion tax idea went unnoticed in last week's Budget speech, a frustrated Nick Clegg did just that.
 
Now it is the turn of his Conservative partners to feel frustrated. Even if the mansion tax itself never sees the light of day, the Lib Dems' price for scrapping the 50p income tax rate will apparently be higher taxes on expensive homes.

George Osborne had wanted to send the message that high tax is only temporary. Clegg has now indicated that it is here to stay, but rather than being levied on top earners' incomes it will be levied on their houses instead.

Whether or not you support high taxation, in economic terms Clegg has a case. Stamp duty on properties over £1m is about to hit five per cent. But main homes remain exempt from capital gains tax, which favours investment in bricks and mortar over more productive forms of saving. In Germany they rent their homes and invest in industry, here we do the opposite.

It is also true that some very expensive houses pay remarkably little council tax. The maximum rate on a mansion in Kensington is £2,158 per year, even if it has just been sold for tens of millions.
 
But even in Kensington, wise politicians tread with extra care when it comes to taxing people's homes. It might be acceptable to make downsizers pay capital gains tax, but what about those with growing families who need to move up the ladder? What about elderly people on modest pensions living alone in the family home - are they to be forced out by higher council tax?

Twenty-five years ago, partly to protect the latter category, Margaret Thatcher tried to reform local taxation. For her pains, the Iron Lady lost her job. After nearly two decades out of government, it would be ironic if the Conservatives were to fall into the same quagmire again. It would be an even greater irony if Nick Clegg were to push them. ·