National Diet Library's latest report reveals that while property tax is positioned as a local tax in many countries, its system design and proportion of local tax revenue varies significantly by country. Based on field research conducted in the UK, Belgium, Italy, and Sweden from September to October 2024, the report provides detailed analysis of each country's property tax system characteristics and challenges.
Property tax is treated as a local tax in many countries due to its conformity with the benefit principle and desirable characteristics for local taxation including universality, stability, and immobility. In 2022, property tax revenue accounted for an average of 39.3% of local government tax revenue in OECD countries. However, country-specific data shows vast disparities, with the UK and Australia depending almost entirely on property tax for local revenue, while Sweden and Switzerland show extremely low proportions.
In the UK, a dual system exists with Business Rates as a national tax on non-residential property (approximately £5 trillion revenue) and Council Tax as a local tax on residential property (approximately £9 trillion revenue). Council Tax has not been revalued since 1991, causing serious divergence between assessed values and market prices, creating a regressive situation where urban areas bear lighter tax burdens while rural areas face heavier burdens. Additionally, the 25% reduction for single-person households is criticized for encouraging inefficient property use.
Belgium faces various problems due to its separated system where regions levy property tax while the federal government conducts assessments. The federal government, which receives no tax revenue, has weak incentives for proper assessment, leading to stagnant cadastral income information updates. Insufficient information sharing between federal and regional governments causes frequent tax amount corrections and confusion in taxpayer accountability.
In Italy, municipalities (comuni) levy property tax (IMU) with revenue of approximately €3 trillion, representing 26.7% of municipal income and serving as an important revenue source. Primary residences are exempt from taxation, and each comune can freely set tax rates within a range of ±0.3 percentage points around the basic rate of 0.76%. However, the self-assessment system where taxpayers calculate their own tax amounts leads to frequent calculation errors, with plans to introduce a new system by 2025.
Sweden transferred residential property taxation from national to local government in 2008, renaming it "property fee" following strong tax resistance during rapid housing price increases from the late 1990s to early 2000s when property tax amounts also surged. Currently, the fee has a cap (approximately 150,000 yen in 2025), representing only 3.85% of local revenue.
The National Diet Library identifies common challenges faced by countries including divergence between assessed values and market prices, increased collection difficulties due to unknown property owners, and responses to population decline and aging, concluding that deepening discussions on Japan's property tax system while referencing foreign systems is important.