According to new data the UK Government made almost £65 billion in property taxes in 2012, a huge rise of nearly £6 billion in just three years.
When measured against the total tax received, UK property tax is higher than in any other country in the world, or so figures from The Organisation for Economic Co-operation and Development (OECD) would appear to show. This research will put added pressure on Labour to rethink its proposed mansion tax, which would add extra financial burden to those who own properties worth over £2 million.
However, the coalition recently announced changes to the stamp duty laws that effectively means people buying homes worth more than one million pounds will have to make higher payments, a move that some have called a disguised mansion tax. This was announced in George Osborne’s Autumn Statement, a full breakdown of which you can find at Alexander & Co.
The OECD looked at 34 countries, predominantly rich nations, including the likes of Japan and the United States, and discovered that the global average for tax paid on property was £1 in every £18.
This figure was as low as £1 in every £77 in Austria, whereas in Australia and France it was £1 in £12. As a percentage of GDP, which measures a country’s economic output, UK taxpayers also pay the highest property taxes in the world.
Britons get hit with property taxes that amount to 4 per cent of GDP, in comparison to an average of 1.8 per cent across the 34 nations analysed. It appears that Germany, Sweden and Chile are the best places to live when it comes to property tax: it’s only 1%! What’s even more galling is that Britons are also lumped with a higher income tax than the OECD average. There is some consolation in the fact that we pay less in National Insurance contributions.
In response to these OECD figures, Paula Higgins, of the HomeOwners Alliance, said to the Daily Mail: ‘These are quite shocking statistics. Taxation of people’s property is a tax on the aspirations of hard-working families and removes the incentive to buy a home.’
Other commentators from the accounting industry have highlighted the raw deal that UK taxpayers get and, while admitting that the recent stamp duty reforms are a step in the right direction, there is still a long way to go before something like a reasonable level of taxation is achieved.
Sweden, Finland and Norwegian are often referenced when it comes to progressive government and tax systems, so it is no surprise to see them collecting the lowest proportion of property tax compared to overall tax. In fact the Economist has even suggested that politicians around the world can learn a lot from the Nordic countries.