Does the UK have the highest rate of property tax in the world?

Published: 22nd Nov 2016

In brief

Claim

The UK has the highest property taxes in the world.

Conclusion

The UK does raise more from property taxes overall than any other developed country, but this includes things like council tax. It doesn’t seem to have the highest stamp duty (or equivalent) in the world.

“…the UK has the highest property taxes in the world. It acts as a disincentive for us to build and for people to move.”

Rob Perrins, Berkley Group, 14 November 2016

“Dear @FullFact - have you ever looked at claim, repeated on @BBCNews last night, that UK "has highest property taxes in the world"?”

Jonathan Eley, Financial Times, 15 November 2016

It’s true that the UK government takes a higher proportion of GDP and a higher proportion of tax revenue in property taxes than any other developed country. But this statistic doesn’t tell us how much of a drag property taxes put on the UK housing market.

To start with, the OECD’s definition of ‘total property taxes’ includes ‘recurrent taxes on immovable property’, like council tax, which don’t generally have a big impact on people’s ability to buy and sell homes.

People buying homes in the UK do have to pay stamp duty, which makes up 2.4% of the UK’s total tax revenue according to the OECD. That’s a relatively high proportion by international standards. Only Korea, Turkey and Italy seem to levy a higher proportion of their tax revenue through stamp duty (although the category we’re using also includes charges on some non-housing transactions, so the comparison isn’t exact).

Looking at the overall take as a proportion of tax revenue doesn’t tell us the rates that particular individuals and companies pay, or how that affects their behaviour when it comes to buying and selling property. The UK doesn’t seem to have the highest rates of tax in the world for individual property transactions, and Scotland has its own system. We haven’t found a source that comprehensively compares the rates on individual property transactions in different tax systems.

And it’s hard to draw easy conclusions from international comparisons without having a decent understanding of how different tax systems work in different countries, and how the burden falls on different parts of society.

That said, there is a debate about whether stamp duty should be changed or abolished in the UK. The Institute for Fiscal Studies has argued that there is little theoretical defence for it in the past.


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