UK 'pays highest property taxes'

British people pay the highest levels of property taxes in the developed world and more than twice the average for the 34 rich countries in the Organisation of Economic Co-operation and Development, according to a think-tank report.

The right-of-centre Policy Exchange said politicians should reject new levies on property - such as the 'mansion tax' on residences worth over £2 million favoured by Liberal Democrats and Labour - and instead pledge to bring down housing costs by building 1.5 million new homes by the end of the decade.

The report called for a least one new 'garden city' and changes to planning rules to deliver 300,000 new houses a year.

Councils that fail to hit their own housing targets should be forced to release land to local people who want to design and build their own homes, said the think-tank.

The report calculated that property taxes including council tax, stamp duty, inheritance tax and capital gains tax amount to 4.1% of GDP in the UK - the highest in the OECD and well above the average of 1.8%.

By comparison, Canada levies 3.5% of national income in property taxes, the USA 3%, Japan 2.8% and Germany 0.9%.