Tue, Aug 16, 2011 - Page 8 News List

Real sales prices key to housing tax

By Chang Chin-oh Teng Hsiao-jung 張金鶚,鄧筱蓉

Faced with today’s highly unfair housing and wealth distribution, we are glad that Democratic Progressive Party (DPP) Chairperson Tsai Ing-wen (蔡英文) proposed levying taxes on transactions of non-self-use residences based on the actual sales price earlier this month. This would be a move in the right direction and deserves further discussion.

Speculation in the housing market has had a big impact on the public’s purchases of residences for personal use. In particular, house prices in the urban areas of northern Taiwan have risen significantly. The government should work to eliminate speculation in the housing market through tax reform to prevent the market from becoming heaven for investors and hell for residents.

However, it will be not be possible to immediately start levying taxes on transactions for housing for purposes other than personal use, since we must first know the real sales price. How could we levy taxes on the actual sales price if it is not recorded accurately? The ruling and opposition camps should therefore hurry to pass the amendments to the Equalization of Land Rights Act (平均地權條例), the Real Estate Broking Management Act (不動產經紀業管理條例) and the Land Administration Agent Act (地政士法), which are all stuck in the legislature, and demand that the government, buyers, sellers and related dealers record the real sales price.

Once the government knows the sales price and releases accurate market information, it will be able to effectively restrain dealers or advertisers from spreading false information to confuse the public. More importantly, it will also be able to reform the real estate tax system, using the actual sales price as the tax base and levying capital gains taxes on properties bought. This would reduce speculators’ inappropriate gains and make the tax system fairer.

As for real estate owners, the tax base should be the real market value of their properties and tax rates should be adjusted according to length of possession and number of properties. We could then increase taxes for those who own several expensive properties they don’t use themselves and reduce the tax burden for the majority of people, who only own their own home, thus making the system fairer. In other words, a fair and reasonable tax system is possible only when the government knows the real trading price.

When discussing housing from the perspective of standard of living, we should always put professionalism before politics. It is a well-known fact that the publicly announced current house value is low and hasn’t been adjusted for years. How could Minister of Finance Lee Sush-der (李述德) say that his ministry is already levying taxes on housing transactions based on the real sales price? If it really was doing so, additional “luxury taxes” on housing transactions would be unnecessary. In addition, if the publicly announced land value has been increased and is really close to the current market value, why have the controversies over compensation for land expropriation increased rather than decreased?

Moreover, if taxes are being levied on the real sales price for housing and land, why was there a need to emphasize that taxes would be levied on such a price when passing the Specifically Selected Goods and Services Tax Act (特種貨物及勞務稅條例), better known as the luxury tax, in April?

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