Tue, Aug 20, 2013 - Page 13 News List

Opinions split on luxury tax review

NEXT STEP:While taxation experts called for a switch to taxing properties based on their actual selling prices, builders and agents said increasing supply was the solution

By Amy Su  /  Staff reporter

Lawmakers and taxation experts yesterday urged the government to tax properties based on their actual selling prices, replacing the interim policy of levying a luxury tax.

However, construction firms and property brokers voiced their opposition to the idea, saying that increasing supply would be a more effective measure to bring down prices and achieve a market equilibrium.

The different views were expressed at a public hearing organized by the Ministry of Finance as part of the government’s plans to review the special sales tax on select goods and services — also known as the luxury tax — which was introduced on June 1, 2011, in part to deal with rising speculative property transactions in several major urban areas.

During the hearing, an evaluation report on the luxury tax, which the ministry commissioned the Chunghua Association of Public Finance (中華財政學會) to conduct, was released.

“The introduction of luxury tax has helped curb speculative property transactions and further stabilize prices in the housing market,” said National Taipei College of Business taxation professor Yophy Huang (黃耀輝), who led the study.

The report said that without the luxury tax, property prices could have averaged 10 percent higher than current levels, making them less affordable for first-time home buyers, Huang added.

He said that the ministry could abolish the luxury tax once it is ready to introduce a tax on the actual selling prices of properties.

However, for the near term, the government should extend the luxury tax to cover properties resold within three years or more — from the current two-year period — while considering levying an additional tax on buyers who already own three properties or more to deal with wealthy investors, Huang added.

Democratic Progressive Party (DPP) Legislator Hsu Tain-tsair (許添財) said introducing a new tax based on the actual selling price is a must for the government to achieve social equality and prevent public protests from further spreading.

Minister of Finance Chang Sheng-ford (張盛和) said the government would not consider abolishing the luxury tax under current market conditions, with a possible view to reviewing the tax every two years.

“The ministry will only consider abolishing the [luxury] tax when there are no longer speculative transactions and excessive property holdings and when young people can afford to buy a house,” Chang said.

However, Real Estate Marketing Agency Association chairman Edward Huang (黃炯輝) said that supply was they key to achieving equilibrium in the real-estate market.

The luxury tax has had no effect on increasing housing supply, but has only dragged down trading momentum in the property market and hurt related industries, Edward Huang said.

Property brokers, realty agents and construction companies would be happy with the government appropriately controlling housing prices, and building more low-cost apartments may be a more effective way of achieving its goal, instead of limiting the industry by levying a tax, he said.

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