New research from the think tank Policy Exchange has found that property taxes in the UK are the highest in the world, equating to 4.1 per cent of GDP, or £70bn, whereas the average in the developed world is just 1.8 per cent.
The think-tank therefore suggests that politicians should reject taxes like the “mansion tax” on £2m-plus homes and pledge to bring down housing costs by building 1.5m 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, while 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.
By comparison, Canada levies 3.5 per cent of national income in property taxes, the USA 3 per cent, Japan 2.8 per cent and Germany 0.9 per cent, with a spokesman for Policy Exchange saying that no other developed country taxes property more heavily than the UK.
However, he added, 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 out-dated planning system, not a tax raid on peoples’ homes.
In reply, a Government spokesman said that the UK has the fourth lowest transaction costs for moving house with property taxation making up the smallest component of overall costs.
He added that the Chancellor has been clear there are no plans for a new house price tax on family homes and that Council Tax has been frozen, whilst business rates for small firms have also been cut.