The organization believes the lien on outdated values in old homes encourages their owners to stay in them rather than free up large homes for younger families.
The price of housing has risen unstoppably in recent years, but taxes on this property have remained more or less stable, generating an “unfair and inefficient” system, according to a report by the Organization for Economic Co-operation and Development (OECD). “House tax revenues have not kept up with price increases,” reveals the document published this Thursday.
For example, the organization that unites 38 countries – including Spain – believes that the housing tax should be revalued based on market prices, so that it does not become obsolete, driving prices up and making it difficult for young people and classes with fewer resources.
The report ‘Housing Taxs in OECD Countries’ reveals that failing to adjust the tax bases of these property taxes to prices creates “distortions” among taxpayers who suffer from price increases as they gain access to the market.
And this means older households have no incentive to move to smaller and less valuable homes and free up space in large homes for younger families, the organization explains. The low tax burden resulting from outdated values ”reduces the incentives to use the housing stock efficiently” as owners of undervalued homes are forced to stay in them.
It’s not just a problem in Spain. The OECD indicates that there are some countries that regularly reconsider their housing taxes, such as Norway, New Zealand or Lithuania. However, most European partners do not: Austria has not revised this tax since 1973, Belgium since 1975, France since 1970 and Germany since 1964. One of the European powers – although already outside the EU – that has more recently revised this system was the United Kingdom, in 1991.
In the case of Spain – whose property tax is the IBI, property tax – it is in the OECD average for property taxes, the report confirms.
The OECD is making a series of recommendations to improve tax fairness, as well as the additional revenue countries would receive from the revaluation of these taxes. “Taxing obsolete securities reduces horizontal equity because households of comparable value may not have comparable tax liabilities, and also vertical equity because more valuable households may not pay more tax,” the organization says.
In addition, they recommend taxing second homes and homes where the owners do not live with higher taxes.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
