COUNCIL tax is a pretty unique system when compared with other countries.
Many countries don’t have council tax, instead funding local services by taxing people’s general income.
So how exactly do other countries do council tax? And if they don’t: How do they fund their local services?
Sweden
The Scandinavian countries don’t do council tax as we know it. Instead, they have a municipal tax which is determined by individual income – not the value of the property they live in.
There is a separate property tax which is levied on real estate – just as there is in the UK.
Sweden has 290 municipalities (or local authorities), which individually determine how much tax to charge.
On average, in 2024 the total municipal tax rate amounted to 32.4%. This was an increase from 2023, when the average rate was 32.2%.
The tax rate increased in 13 municipalities, while 23 municipalities chose to decrease their rate.
Municipalities in Sweden can decide whether or not to raise municipal taxes, as opposed to the central government.
Norway
Similarly, Norway does not use a council tax system like the UK. Instead, residents pay a municipal tax which is determined by income.
The maximum rates for income tax payable to the local authorities are set by the Storting – the Norwegian parliament – each year as part of the budgeting for the coming year.
This year, income was taxed at a flat rate of 22%.
Norway has a total of 356 municipalities for a population of around 5.5 million people (a similar population to Scotland, which has just 32 councils).
Denmark
Denmark also uses a municipal tax instead of a council tax system.
Here, municipal taxes include a local income tax based on residents’ earnings and property taxes on real estate.
There are 98 municipalities in Denmark – each municipality determines the tax percentage that its citizens must pay.
In 2024, the average local tax rate was around 25%.
Germany
In Germany, local services are funded through the broader tax system, rather than a specific council tax.
This is through a combination of municipal business taxes (known as Gewerbesteuer), property taxes (Grundsteuer) and a share of income tax.
Municipalities – of which there are around 11,000 in Germany – get to determine the rate at which they tax. In 2024, the average was around 12.9%.
On an interesting side note, Germany has a lot of interesting taxes – such as the dog tax, which people have to pay if they own a dog.
The tax is around €90 to €150 per year – higher if you own more than one dog – and is used to finance facilities like dog parks.
Italy
Italy does not use a council tax system like we see in the UK. Instead, municipalities in Italy collect various taxes, including:
- The IMU (Imposta Municipale Unica) – property tax
- The TASI (Tributo per i Servizi Indivisibili) – goes directly towards funding local services
- The TARI (Tassa sui Rifiuti) – goes towards waste management
The rate of municipal tax ranges from 0.1% to 0.9%.
There is also a regional tax, which is set by the central government according to income, although the regions can add an additional 0.7% to 3.33%.
Regions are different to municipalities – they have their own governments and are responsible for areas like healthcare, transport and education. There are 20 regions in Italy.
Municipalities (also known as comuni) are all about local governance: Waste management, local policing, urban planning and social services.
There are 7918 municipalities in Italy.
Japan
Local government in Japan is not funded by a specific council tax.
Instead, residents pay a combination of local taxes, which include a residential tax, a property tax and various other levies including on businesses and vehicles.
Whilst the central government sets a fixed tax rate for a number of local taxes, it provides ranges for others and the amount varies depending on the municipality.
There are 1719 municipalities in Japan.
United States
Moving over to America, there is no such thing as a specific council tax.
Local governments fund their services through property taxes, sales taxes and various fees.
Property taxes are the main source of income for local governments and are assessed on the value of real estate.
Sales taxes are levied on specific goods and services and are imposed by many localities.
Local governments can also charge fees for specific services, such as utilities, permits and licences.
The specific taxes and rates vary widely because each state and locality has its own tax structure.
In the United States, there are approximately 90,000 local governments in place. This includes 3000 counties, 19,000 municipalities and around 16,000 townships.
Canada
Similarly, in Canada the main source of income for local government is through a property tax – there is no specific council tax.
Rates can vary across Canada’s 3573 municipalities.
Local services are also funded in other ways – such as through grants from provincial or federal governments, and a fee for those who use local services.
