Tue, Jan 25, 2011 - Page 12 News List

Tax on short-term land transactions being mulled: Lee

By Crystal Hsu  /  Staff Reporter

The government plans to levy a special consumption tax on short-term land transactions and luxury goods, Minister of Finance Lee Sush-der (李述德) said yesterday, in yet another bid to rein in soaring property prices.

Lee’s remarks confirmed a report by the Chinese-language Commercial Times that the Cabinet held a closed-door meeting on the issue last Friday to help distribute the nation’s income in a more equitable fashion.

“More discussion will be needed as different ministries remain divided on the levy,” Lee said by telephone. “The ministry will disclose details once a consensus is reached.”

The minister refused to elaborate to avoid stoking unnecessary controversy.

However, the ministry reportedly proposed imposing a special consumption levy on land transfers for which ownership lasts less than a year, the daily said, citing unnamed sources. Currently, short-term ownership allows landowners to bypass the annual land tax.

The ministry intends to apply the levy on all short-term land transactions nationwide, but the Ministry of the Interior suggested targeting the greater Taipei area, where property prices are considered unreasonably high, according to the newspaper.

The preliminary tax plan seeks to subject all short-term land transfers to the special levy whether they generate profits or not, the paper said, adding that it would extend to purchases of high-end import cars, jewelry, golf memberships, brand-name handbags and other luxury goods.

Lee said he considered it wise not to comment on the report before the differences were settled.

Still, the special consumption tax plan marked the latest in a series of measures to cool the nation’s property market.

Early last week, the Cabinet reinstated the idle land tax, whereby local governments may fine owners with idle or underused plots of land to curb hoarding.

On Friday, the Financial Supervisory Commission joined the tightening campaign, holding a discussion on whether to raise risk controls and minimum capital requirements for land acquisitions by insurance companies.

The commission said it was time to revise relevant measures to reflect changes in the macroeconomic environment in recent years.

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