High-income, high-wealth and older households hold “a disproportionate share” of housing wealth in Organisation for Economic Co-operation and Development (OECD) countries, including the Republic, and there is “substantial room” for taxation policy reforms, a new study has found.
The OECD report said more efficient and equitable taxation of housing would improve societal fairness and functioning of the housing market, as well as raise more revenue.
Unprecedented growth in house prices over the last three decades has made owning property “increasingly difficult” for younger generations, it notes.
“In the face of unprecedented housing market challenges, it is more important than ever to ensure that housing taxes are both fair and efficient,” said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration.
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“There is significant scope for countries to improve the design and functioning of housing taxes and this report provides a number of policy options to help countries implement reform.”
With the residential sector accounting for 17 per cent of energy-related CO2 emissions, the report suggests that the tax system has a role to play in reducing emissions, but recommends improved targeting of tax incentives for energy-efficient housing renovations to ensure relief reaches low-income households.
Housing tax reforms require careful timing to be successful and may need to be adapted to macro-economic developments, the report says, in particular the environment of high inflation and rising interest rates that currently prevails.
