Real-estate experts yesterday suggested that the government include short-term transactions on pre-sale homes and farmland to a luxury tax bill to expand the levy’s aim of cooling down the property market.
Ten industry representatives and academics joined a public hearing held by the legislature’s Finance Committee to discuss the proposed special sales tax, also known as a luxury tax.
“The levy cannot effectively cool down the housing market if it is not imposed on pre-sale houses, as short-term speculative transfers of ownership is a major factor behind soaring housing prices,” said Chang Chin-oh (張金鶚), a land economics professor at National Chengchi University.
Short-term transactions on farmlands should also be subject to the luxury tax for the same reason, said Lin Wan-ken (林旺根), house committee convener of the Consumers’ Foundation (消基會).
Deputy Minister of Finance Chang Sheng-ford (張盛和) said the proposed luxury tax does not include pre-sale houses because this type of transaction involves transfers of ownership and not sales per se.
However, “people who sell a pre-sale property are subject to an income tax of up to 40 percent, higher than the proposed luxury tax,” he told a media briefing.
The high levy they have to pay on income taxes has reduced speculative transfers of ownership on pre-sale homes, he added.
However, Chang Chin-oh said the ministry had never proved that the high income tax rate had stopped speculators from using these short-term transactions on pre-sale homes to drive up real-estate prices in some regions, as tax administration offices had difficulty tracking such transactions.
Chang Sheng-ford said the ministry would double its efforts to obtain full information about such transactions from real-estate firms and follow up on these cases.
The ministry will also take into consideration other types of transactions that might be included in the luxury tax bill, he said.
The Finance Committee expects to start review of the luxury tax bill on Wednesday, Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰) said.
Fai, who is also convener of the committee, said the KMT caucus fully supports having the committee pass the bill on Wednesday to ensure that the levy could be introduced at the start of July.