The Cabinet’s opposition to a proposal by the Ministry of Finance (MOF) to change the current flat housing tax rate to a five-graded system based on property value in an effort to rein in soaring housing prices will further exacerbate public anger, an academic said yesterday.
“We have found it is becoming more obvious that the nation’s policymaking is being interfered with by political factors,” Hua Ching-chun (花敬群), an associate professor of finance at Hsuan Chuang University, told the Taipei Times by telephone.
Hua said that with the special municipality elections at the end of this year, the government does not want to displease property developers by raising the housing tax rate over concerns that doing so may impede their fundraising for elections.
Hua’s remark came after Premier Wu Den-yih (吳敦義) said last Wednesday that the ministry’s proposed progressive housing tax scheme was not “appropriate for the time being,” saying that some reform measures were still under discussion as it is difficult to determine which houses should be considered “luxury residences.”
“Apparently social pressure on the government is not enough. The government seems to only care about the interests of big corporations and has turned a deaf ear to the majority of society,” Hua said.
Deputy Minister of Finance Chang Sheng-ford (張盛和) said yesterday that the proposed amendment to the House Tax Act (房屋稅條例) would be shelved for the time being if the Cabinet has reservations about it.
“We learned about the news from media reports as well, and we have yet to be officially informed by the Cabinet of its opposition to the proposal,” Chang said.
If there were further updates on the matter, the ministry would let the public know, Chang said.
The ministry originally proposed changing the current single housing tax rate for residential units of 1.2 percent to a range of between 1.2 percent and 1.8 percent, depending local governments’ valuations.
The ministry said only 3.4 percent of all households in the country would be taxed at a higher rate under the new scheme.
Most real estate brokers said the new tax rates — if they took effect — would have a limited effect on the current property market, particularly in Taipei City.
However, the Cabinet’s about-face on the proposed amendment has reportedly frustrated the finance ministry.
The Chinese-language daily the Commercial Times reported on Saturday that housing taxation reform may be halted this year because of the year-end special municipality elections. The paper cited ministry’s sources for the report.
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