IMF proposes to reform the taxation of UK

30.07.2014

The International Monetary Fund (IMF) has recommended a series of tax reforms in the UK, including a complete overhaul of the system of property taxation.

According to the IMF, reform of property taxation can stimulate the housing market, improve the allocation of housing and increase revenue from such tax to the budget.

Other measures proposed by the IMF in the field of tax policy are the proposal to reduce tax expenditures (eg, zero VAT, the amount of which is equal to only 2.5% of the country's GDP), and a proposal to expand the use of so-called "Pigou tax", which includes environmental taxes.

The IMF also noted that the increase of the budget should occur without compromising economic growth.

Source: http://www.imf.org/external/pubs/ft/scr/2014/cr14233.pdf

Expert’s opinion

British real estate, for the most part is a sort of slightly advanced closet with a window, meaning – it is tiny.

We here consider that the kitchen of 18 meters is good. In London, 18 meters may be small apartment with a kitchen, living room and bedroom.

Relatively recently, compared with the history of England, the construction of houses, townhouses, based on the continental model, has started.

But places on the island are all busy. Taxes on land and property do not allow thinking that on the fact that in place of the existing housing will be build something cheap.

Change in the approach to the taxation of land and reduction of property taxes definitely will attract investment in this sector and buyers.

It will create additional jobs and taxes.

Here is how to stimulate revenue - to expand the tax base and to reduce taxes.

Yaroslav Lomakin ( Managing Partner, Honest&Bright)