Mon, Oct 25, 2010 - Page 12 News List

Experts call land amendment ineffective

SPECULATION:The change in the Equalization of Land Rights Act is meant to increase land taxes to stop large developers from hoarding land that they think is undervalued

By Ted Yang  /  Staff Reporter

The Ministry of the Interior’s recently passed amendment to the Equalization of Land Rights Act (平均地權條例) to normalize overly low land valuations won’t effectively solve the problem of land hoarding, experts said.

Once the amendment passes legislative reviews, publicly announced land values will be reassessed every year instead of every three years. Current land values could be flexibly adjusted upon the occurrence of short-term irregular fluctuations in property prices.

“Although it [the amendment] will improve the current situation, the publicly announced property valuation — a basis of land value tax — is still a far cry from actual market values,” said Chang Chin-oh (張金鶚), a land economics professor at National Chengchi University.

The amendment was made to address public concerns that property valuations were too low and didn’t reflect actual market values, resulting in property developers hoarding land to profit from housing price speculation.

On Friday last week, Hsiao Fuu-dao (蕭輔導), head of the ministry’s Department of Land Administration, said the proposed reevaluation of publicly announced land values on a yearly basis would gradually increase land value taxes for property owners, thereby reining in land arbitrage.

The flexible adjustment of the current land value is targeted at property investors or speculators, who will have to pay higher taxes for capital gains from rising land values, Hsiao said.

The current land value, which is announced once every year at present, is the basis for levying land value incremental tax.

“Big corporations are not too worried about it because the adjustments are too small for them,” Chang said, adding that it would be more effective to adjust the tax rate than the tax base. “The impact of the adjustments of the tax base on property speculation will be limited.”

At present, local land value assessment committees, consisting of experts, academics and regional representatives, meet once every three years to assess property valuations. However, oftentimes the land value remains unchanged after assessments because of public pressure.

Chang said that even if the frequency of meetings were increased, the problem would still exist.

“The land value should be decided based on market values rather than human behavior,” he said.

HB Housing (住商不動產) spokeswoman Jessica Hsu (徐佳馨) agreed, saying that local governments would not likely raise the land value too much because it could hurt regular home owners.

“But in the long run, the land value tax should reflect actual market prices if the government wishes to increase tax burdens on property owners to prevent land hoarding,” she said by telephone.

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