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European Commission urges UK to tax expensive homes more

by: Professional Adviser
  • 03/06/2014
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European Commission urges UK to tax expensive homes more
The European Commission has called on the UK to raise taxes on higher value properties, build more houses and adjust the Help to Buy scheme.

The commission said council tax bands should be revalued, which would put up bills for some people, the BBC reports.

Each year the commission offers member states advice intended to help ensure long-term growth.

The Treasury said the UK, as one of the fastest growing economies, would listen to the commission with interest.

In far-reaching recommendations the European Union’s executive body also said the UK should prioritise capital spending.

The commission described Britain’s council tax system as “regressive”, being relatively high on lower value properties.

The UK government said the commission’s recommendations were “in line” with its own approach. EU leaders will discuss the advice later this month.

The commission said: “Action is needed to further boost the supply of houses – by creating appropriate incentives to raise supply at the local level.

“The authorities should continue to monitor house prices and mortgage indebtedness and stand ready to deploy appropriate measures, including adjusting the Help to Buy 2 (loan guarantee) scheme, if deemed necessary.

“Reforms to the taxation of land and property should be considered to alleviate distortions in the housing market.

“At the moment, increasing property values are not translated into higher property taxes as the property value roll has not been updated since 1991 and taxes on higher value property are lower than on lower value property in relative terms due to the regressivity of the current rates and bands within the council tax system.”

It added: “Remove distortions in property taxation by regularly updating the valuation of property and reduce the regressivity of the band and rates within the council tax system. Continue efforts to increase the supply of housing.”

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