While it won’t do much to soothe frustrations for many, The Irish Times has reported that Irish property taxes are among the lowest in the Organisation for Economic Co-operation and Development (OECD). The study was carried out by London-based research company, Policy Exchange. The results showed that property taxes in the Republic of Ireland amounted to 1.5 per cent of GDP as opposed to the highest in the OECD which is the UK with property taxes accounting for 4.1 per cent.
The OECD is an organisation with members from 34 countries, primarily developed nations in Europe, North America and the Asia-Pacific region. The OECD average property tax was 1.8 per cent of GDP which Ireland falls under. The 1.8 per cent average is what the ERSI expects to apply in Ireland when local property tax (LPT) comes into effect fully next year. The study – titled ‘Taxing Issues? Reducing House Demand or Increasing Housing Supply’ – has pushed for policymakers to commit to building more attractive 1.5 million developments by 2020 so that cities will “act as beacons of development”.
The study is underlined by the notion that home ownership is desirable, citing the decrease in home ownership in the UK between 2002 and 2011 from 70 per cent to 64 per cent as “not acceptable”. Property taxes defined include taxes on occupancy such as the LPT, taxes on transfers such as stamp duty, capital gains taxes and taxes on the increase of land value due to planning permission. While all of these countries apply property taxes, the way in which they do so differs greatly.
Examples used include Canada who pay 3.5 per cent of GDP on property taxes with administration carried out by local and provinical authorities with specific regional variations. There are no capital gains taxes on primary residences but non-residents pay 50 per cent as a witholding tax. Meanwhile Austria only pay a very low 0.5 per cent of GDP on property taxes with a uniform tax ranging from 0.05 per cent to 0.2 per cent as well as a local property tax surcharge.