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CEPD chief favors taxing capital gains on property

Council for Economic Planning and Development (CEPD) Chairman Tsai Hsun-hsiung (蔡勳雄) yesterday said he supported raising taxes on property transactions to help rein in surging real estate prices.

Tsai made the remark in a legislative hearing after lawmakers expressed concern that owning a house had become increasingly untenable given rising housing prices and falling wages.

Tsai said he believed all incomes should be taxed and suggested the Cabinet’s Tax Reform Committee place the issue on its agenda.

“I’ve always favored subjecting all incomes to taxes,” Tsai told the legislature’s Economics Committee. “Currently, the government only imposes a levy on land incremental value and has spared capital gains from property transactions from taxes.”

The CEPD, responsible for mapping out the nation’s economic policies and monitoring their implementation, called two meetings last week on property price hikes and falling wages. Regular take-home wages averaged NT$35,879 (US$1,103) a month in August, dropping 1.88 percent from the same period last year, government data showed.

Tsai’s statements came after central bank Governor Perng Fai-nan (彭淮南) last week asked state-run banks to tighten mortgage risk management.

The CEPD chief said income from salary accounts for only about 45 percent of GDP, meaning that many derive income from other sources such as capital gains. Tsai pointed to the large difference between government-assessed value and the market prices of a property.

He suggested raising taxes on property investments to discourage speculation and make home ownership more affordable.

However, the Tax Reform Committee, due to disband by the end of the year, is unlikely to take up the proposed property tax hikes, a finance ministry official said, requesting anonymity.

The official said property transactions gains are already subject to taxes, but dishonest filings make it difficult to collect the levy.
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