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Monday, 15 March 2021

HAS THE UK GOT THE WORST PROPERTY TAXES? PART 1. TAXES TOO HEAVY

 UK home-owners pay the highest property taxes

 Hansjörg Blöchliger is not a well-known name in housing market analysis, but under the aegis of the OECD he has produced TWO papers which add greatly to our understanding and insight. I’ll deal with the second paper in my next posting, but here I’m looking at his curiously titled

“Taking care of the unloved: Reforming the tax on immovable property”

Bizarre title! On this blog at any rate certain kinds of ‘tax on immovable property’ are loved and cherished! We love Land Value Tax or Plot Price Charge as I prefer to call it!

This is an OECD economics department working paper 1205, produced in April 2015.

[OECD Organisation for Economic Co-operation and Development is a 37-member rich countries’ club, excluding Russia and China. It produces high-quality research reports, which is the source used here.]

And here’s what the report shows about property taxes:

Just in case there is any doubt ‘GBR’ is the shorthand for us here in the UK. And GBR is the clearly the biggest loser, with the highest property taxes amongst all of these 37 economically advanced countries!

Let this be a warning to all Georgists! GBR already has the highest property taxes. Expecting LVT to yield fantastically higher amounts is wildly unrealistic.

But it is also a blessing: There’s a lot of tax revenue to play with. British taxpayers are used to paying more. Could the burden of tax be changed for the better?

Could moving the property taxes around, changing the way the tax falls do  something to fix the housing? Yes, but that’s for the next posting.

 International Comparisons

The Economist (Feb 2020) identified 3 countries where ‘the housing market broadly works’ — Singapore, Germany and Austria. Singapore is not in the OECD, but what of DEU (Germany) and AUT (Austria)?

DEU and AUT are both pretty low tax regimes, as are the two countries either side of DEU. They are SVN — Slovenia and SVK — Slovakia. I’ll have a lot more to say about these two ‘Slo’s next post!

So does low tax = housing market fixed? Some evidence here.

But what of the opposite? High tax = dysfunctional housing market? Maybe. As well as our homeland GBR, notice that JPN — Japan is also a high property-tax regime.

 

 

Full citation for this paper Blöchliger, H. (2015), "Reforming the Tax on Immovable Property: Taking Care of the Unloved", OECD Economics Department Working Papers, No. 1205, OECD Publishing, Paris, https://doi.org/10.1787/5js30tw0n7kg-en.

 

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