Part I

Overall tax revenue

Table 2.3: Taxes on property - total

% of total taxation, 1995-2010

BE
BG
CZ
DK
DE
EE
IE
1)
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK
EU-27
EU-17

P
r
o
p
e
r
t
y

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
5.5
5.9
6.1
6.4
6.3
6.3
6.2
6.3
6.6
7.0
6.9
7.2
7.1
7.0
6.9
7.1
0.8
0.8
0.3
0.8
0.8
0.8
0.8
1.0
1.1
1.1
1.3
1.9
2.1
2.2
1.9
1.9
1.5
1.5
1.6
1.7
1.5
1.5
1.5
1.5
1.5
1.1
1.2
1.2
1.2
1.2
1.2
1.3
3.5
3.3
3.4
3.6
3.6
3.2
3.4
3.6
3.8
3.7
3.7
3.8
3.8
4.1
4.0
4.0
2.2
2.3
2.1
2.2
2.2
2.1
2.1
2.1
2.2
2.3
2.3
2.3
2.3
2.2
2.2
2.2
1.0
1.1
1.1
1.1
1.1
1.3
1.2
1.1
1.1
1.0
0.9
0.8
0.7
0.9
1.0
1.0
4.7
4.8
4.9
5.1
5.5
5.5
5.7
5.3
6.4
6.9
7.8
8.9
8.1
6.3
5.7
5.6
4.1
4.4
4.7
4.4
5.6
5.8
4.8
4.1
4.1
3.8
3.8
5.0
5.0
5.0
4.3
2.8
5.7
5.6
6.0
6.2
6.4
6.5
6.5
6.8
7.5
8.1
8.7
9.0
8.3
7.3
7.0
6.7
6.2
6.3
6.6
6.8
6.8
6.6
6.6
6.8
7.0
7.3
7.5
7.5
7.7
7.5
7.9
8.1
4.9
4.9
6.1
5.6
4.9
4.6
4.3
4.6
4.4
4.6
4.6
4.8
4.7
4.1
5.2
4.4
2.3
2.0
2.0
2.3
2.0
5.0
3.2
2.5
2.7
4.9
5.3
3.6
5.0
3.6
2.4
2.7
3.0
3.2
3.3
3.6
2.8
3.2
3.1
2.9
2.8
2.7
2.3
2.0
3.0
2.3
2.7
3.1
2.6
2.8
2.4
2.2
2.4
2.4
2.1
2.1
1.9
1.7
1.5
1.4
1.2
1.3
1.7
2.0
3.7
4.1
4.1
4.4
5.0
4.9
4.4
3.9
3.7
3.6
3.7
3.9
4.3
3.4
3.0
2.9
1.2
1.5
1.5
1.6
1.6
1.7
1.8
1.8
2.1
2.2
2.2
2.2
2.0
2.1
2.0
3.0
3.8
3.7
3.3
3.3
3.0
2.8
3.0
3.7
3.7
5.0
4.8
4.6
4.8
3.9
3.2
3.2
3.8
4.2
4.4
4.6
4.8
4.9
4.7
4.9
4.7
4.9
5.1
4.3
4.3
3.9
3.4
3.3
1.4
1.4
1.3
1.3
1.3
1.3
1.2
1.2
1.2
1.2
1.3
1.3
1.3
1.2
1.2
1.2
2.8
2.9
3.0
3.1
3.3
3.5
4.0
4.4
4.2
4.2
4.0
3.7
3.4
3.5
3.8
3.7
3.6
3.2
3.2
3.6
4.0
4.0
3.8
3.9
3.8
3.8
4.0
4.0
4.3
4.0
4.0
3.9
1.0
1.0
0.7
1.3
1.9
2.2
2.5
2.4
2.7
2.6
2.5
2.9
3.3
3.0
2.9
3.1
1.4
1.4
1.7
1.9
1.9
1.7
1.7
1.6
1.5
1.5
1.5
1.6
1.6
1.5
1.6
1.6
1.3
1.5
1.6
1.6
1.7
1.7
1.7
1.7
1.7
1.7
1.6
1.5
1.4
1.3
1.5
1.5
2.2
2.3
2.3
2.4
2.4
2.4
2.3
2.4
2.3
2.6
2.7
2.5
2.6
2.6
2.6
2.7
2.8
3.6
3.8
3.6
3.5
3.4
3.1
3.1
3.1
3.1
2.9
2.9
2.4
2.2
2.3
2.3
9.9 10.1 10.3 10.4 10.7 11.5 11.4 11.9 11.8 11.9 11.9 12.2 12.4 15.1 12.5 11.9
3.2
3.3
3.4
3.5
3.6
3.7
3.6
3.6
3.7
3.9
3.9
4.0
4.0
3.8
3.6
3.6
3.4
3.5
3.6
3.7
3.8
4.0
3.7
3.7
3.8
4.1
4.3
4.3
4.3
3.9
3.7
3.6

t
a
x

1) Data for Greece is provisional for years 2003-2010

Source: Commission services

anticipation of family growth and perhaps hold on to an

unnecessarily large home later in life, leading to
wasteful usage of the building stock (35).
With regards to the business cycle, revenue from
transaction taxes is more cyclical, peaking during
housing booms and dropping during busts as not only
prices vary but also the number of transactions (36).
According to some studies, the difficulty of accounting
for booms and bust cycles in cyclical adjustment may
have contributed to an overestimation of the structural
budget balance as temporary tax revenues, e.g. on
transactions, were considered to be permanent (37). At
any rate, revenues from transaction taxes on immovable
properties are more erratic compared with the regular
and foreseeable behaviour of recurrent taxes (38).
(35) See for example Chiuri, M, and Jappelli, T, 2008
(36) Transaction volumes drop significantly more than both income and asset
prices. See Gurdgev (2009).
(37) European Commission (2010a)
38
( ) See Gurdgiev, (2009), for a detailed comparison of the properties of recurrent
vs. transaction taxes in Ireland.

Finally, transaction taxes on immovable property are

rather questionable from an equity perspective as there
seems to be no valid reason to penalise those who buy
and sell property more frequently compared to buyand-hold agents. They also offer some opportunity,
through underreporting of sales prices, of tax evasion.
Recurrent annual taxes are not affected by these
disadvantages. To the extent that they, at least partly,
effectively fall on land values, they tax a rent and thus
do not affect output. Tax capitalisation implies that a
discretionary increase may be effective in dampening
booms, while another advantage is that their revenue is
highly predictable. Although the difficulty of
instantaneously and fully adjusting for immovable
property values does imply a certain pro-cyclicality of
these taxes, as their burden will tend to increase in a
phase of declining prices, in principle nothing prevents
governments from enacting discretionary cuts in a
slump. Moreover, recurrent immovable property taxes
can be made to be progressive and they are more
difficult to evade than taxes such as the PIT or the CIT,

Taxation trends in the European Union

49