UK 'pays highest property taxes'


keychain figure of house and...

British people pay the highest levels of property taxes in the developed world and more than twice the average for the 34 rich countries in the Organisation of Economic Co-operation and Development, according to a think-tank report.

The right-of-centre Policy Exchange said politicians should reject new levies on property - such as the "mansion tax" on residences worth over £2 million favoured by Liberal Democrats and Labour - and instead pledge to bring down housing costs by building 1.5 million new homes by the end of the decade.

The report called for at least one new "garden city" and changes to planning rules to deliver 300,000 new houses a year.

Councils that fail to hit their own housing targets should be forced to release land to local people who want to design and build their own homes, said the thinktank.

The report calculated that property taxes including council tax, stamp duty, inheritance tax and capital gains tax amount to 4.1% of GDP in the UK - the highest in the OECD and well above the average 1.8%.

By comparison, Canada levies 3.5% of national income in property taxes, the USA 3%, Japan 2.8% and Germany 0.9%.

Alex Morton, head of housing and planning at Policy Exchange, said: "No other developed country taxes property more heavily than the UK. Yet rising house prices and falling levels of home ownership have led to many calling for an increase to land and property taxes.

"But these issues will only be solved by genuine reform of the outdated planning system, not a tax raid on peoples' homes. Politicians cannot try to do everything at once and must focus on the most crucial issues.

"The evidence shows where excess credit and under-supply exist, taxation or subsidy can only have a limited impact. That is why policymakers should ignore calls for a new round of property taxes and instead commit to spreading the benefits of homeownership and stabilising the UK economy by building at least 1.5 million new homes over the course of the next Parliament.

"This means serious reform of the planning system and creating new ways to deliver housing."

A Government spokesman said: "The UK has the fourth lowest transaction costs for moving house with property taxation making up the smallest component of overall costs.

"The Chancellor has been clear there are no plans for a new house price tax on family homes. This Government has frozen Council Tax for hard-working people and cut business rates for small firms, despite the need to pay off the deficit left by the last administration.

"We have delivered a series of reforms to speed up and simplify the planning system, including a comprehensive package to support self-builders. House builders credit Government action for getting the housing market moving again, and schemes like Help to Buy are giving hard-working people a helping hand to increase home-ownership"

Dan Wilson Craw, spokesman for the PricedOut campaign for people who would like to buy a home but cannot afford to, said: "Every month, private tenants are seeing their dream of home-ownership slipping further from their grasp - and all the while they're paying off the mortgage of their landlord who gets rich from rising house prices.

"This is a symptom of a society that treats houses as an asset to speculate on rather than somewhere for people to live. Tinkering with the tax system could help make the system fairer, but under-supply is the real problem. If political leaders were bold and built 1.5 million more homes over the next Parliament, they could make a real difference to the cost of living."

Where are Britain's highest tax bills?

Where are Britain's highest tax bills?