OECD Recommends Swedish Property Tax Reform

The OECD has recommended that Sweden rebalance its property tax system.

In its latest Economic Survey for the country, the OECD said that Sweden’s favorable tax treatment of owner-occupied housing is regressive, benefiting relatively high-income households most and contributing to the high demand for housing. It said it also encourages household indebtedness.

The OECD recommended that the Government reform the recurrent property tax to better align tax charges with property values, and phase out the deductibility of mortgage interest rate payments. It did however suggest that interest deductibility should be phased out over a long period so as to avoid destabilizing the market.

The OECD also said that the Government should continue to gradually phase out exemptions to the carbon tax.