Fri, Mar 04, 2011 - Page 1 News List

Realtors worried about luxury tax plan

NEGATIVE EFFECTS:Representatives from the real-estate industry said that a 10 to 15 percent levy on short-term transactions could have a dire effect on the economy

By Amy Su  /  Staff Reporter

Real-estate representatives yesterday reached a broad consensus with the government about the proposed luxury tax at a meeting held by the Ministry of Finance, but they remained concerned that the tax could hurt the real-estate industry and even weaken the nation’s economy.

“The property market will be hurt if the government insists on levying the tax retroactively and does not think about withholding the tax on transactions (making no money),” said Wang Ying-chieh (王應傑), convener and spokesman for the General Chamber of Commerce (全國商業總會).

As the levy would impose a 10 to 15 percent tax on short-term real-estate transactions, homes with lower prices, mainly in central and southern Taiwan, would also be subject to the tax, which could decrease the number of home sales and cause great damage to the market, said Wang, who is also chairman of real-estate broker Eastern Realty (東森房屋).

The proposal aims to impose the tax on all short-term transactions even if the owner does not sell the house for speculative purposes or earns no money on it, possibly leading to many unfair results, he said.

“It makes no sense to impose the luxury tax on people who are selling their homes in order to move or turn over capital,” he said.

Wang Kuang-hsiang (王光祥), chairman of the Federation of the Real Estate Development Association of the Republic of China (中華民國建築開發公會), also said the industry could be harmed by the luxury tax, since the overall turnover in the local housing market has declined since the tax proposal was unveiled last week.

The nation’s economic recovery is the main driver in the housing market’s prosperity and if the market cools down too much because of the luxury tax, consumer sentiment would also be influenced negatively, he said.

“We hope ‘the golden 10 years’ proposed by President Ma Ying-jeou (馬英九) do not become ‘the scary 10 years’ with a levying of the luxury tax without more consideration,” Wang said.

Despite the real-estate industry’s worries about the tax proposal, Deputy Minister of Finance Chang Sheng-ford (張盛和) said yesterday that the introduction of the luxury tax would not hurt the nation’s economy, because the demand in the housing market would remain unchanged, but would only transfer short-term speculative investments to long-term ones.

Besides, the tax would not be imposed on self-use properties, which account for about 70 percent of residential properties nationwide, ensuring the tax would not affect most people, Chang said.

Minister of Finance Lee Sush-der (李述德) said the tax plan could affect a very limited number of households because the number of transactions of non-self-use residences was between 20,000 and 30,000 per year.

The ministry is scheduled to hold a second meeting today to confirm the articles of the draft measure, which would also apply to luxury cars and other such items.

It is expected to send the draft to the Cabinet for review by Thursday next week in the hope that the measure can take effect in July, Chang said.

Premier Wu Den-yih (吳敦義) yesterday again offered his endorsement for the tax plan, saying that it was a great injustice that the government had been unable to impose taxes on short-term housing transactions, which have been an important force driving up housing prices, because sellers could accumulate large profits in a short time.

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