Land-tax measure to be extended

The finance ministry is proposing to extend a measure that halves the incremental land-value tax for another year, as a draft amendment to permanently lower rates has little chance of receiving the legislature's green light by the end of the year, Minister of Finance Lin Chuan (林全) told lawmakers yesterday.

Lin's remarks came after President Chen Shui-bian (陳水扁) announced on Wednesday to extend the tax break for another year. The measure was originally supposed to end in January.

"The measure is to avoid impacting the real estate sector, as well as to sustain the boom in property sales this year," Lin said.

The tax, levied on sales of all land, is based on an increase in the government-assessed value of the property, adjusted for inflation as measured by the consumer price index. Reducing the land-value tax allows people to sell properties at a lower cost and gives buyers more bargaining power.

The tax rates were originally set at 40 percent, 50 percent and 60 percent, by the value of the land, and the government temporarily halved the rates starting in 2002 to stimulate the property market.

As the measures boosted real estate sales, the ministry drafted a bill to fix the rates at 20 percent, 30 percent and 40 percent in accordance with suggestions of local industry leaders. But the amendment is not likely to pass the legislature by the end of the year.

Opposition lawmakers, including Norman Yin (殷乃平), yesterday grilled Lin over the ministry's proposal. They said the move is aimed at eliciting more votes for the ruling party in view of the upcoming legislative elections on Dec. 11.

Lin dismissed political considerations were at play.

"The extension of the tax break is not an election tool," he said.

In addition to the extension of the tax break, the government is also mulling the continuation of preferential loans to home buyers to fend off possible pressure from surging oil and raw materials prices.

The nation's central bank has offered a total of NT$1.38 trillion in preferential loans over the past four years, with about NT$220 billion left -- out of the original NT$300 billion fund -- for first-time home buyers, according to the bank's statistics.

Bolstered by this positive news, construction stocks shot up 3.5 percent on Wednesday and remained active during yesterday's morning session, before turning to negative territory and closing down 1.74 percent on the Taiwan Stock Exchange.