A statutory tax on short-term housing transactions and certain costly goods was enacted with only minimal opposition yesterday.
The Selective Goods and Services Sales Tax Act (特種貨物及勞務稅條例) could take effect as early as June 1 if the government is able to make the necessary preparations for its implementation in time, Premier Wu Den-yih (吳敦義) said.
The legislation, after being referred to the legislature by the Executive Yuan early last month, only took one month to pass amid increasing public concern about the affordability of housing in major cities, particularly in the Greater Taipei area, and rising income inequality.
Photo: Lo Pei-der, Taipei Times
The statute will impose a 15 percent tax on properties resold within one year of purchase and a 10 percent tax if sold within two years of purchase. Eleven exemptions were introduced to ensure the new tax was not levied on non-speculative transactions.
In addition, certain goods and services will be subject to a 10 percent tax. Items that are included are cars, yachts, aircraft, helicopters and light planes that exceed NT$3 million (US$103,300) in cost, as well as hawksbill turtle products, turtle shells, coral, ivory, furs and related products, furniture and non-refundable memberships worth more than NT$500,000.
Lawmakers introduced a -subparagraph into the bill that excluded purchases of protected wildlife and their products that are not covered by the Wildlife Conservation Act (野生動物保育法) from the new tax, which effectively removed coral jewelry that is not from a protected species from the list.
Photo: Wang Yi-sung, Taipei Times
President Ma Ying-jeou’s (馬英九) endorsement of the so-called luxury tax apparently did the trick for the legislation, as some Chinese Nationalist Party (KMT) lawmakers from southern Taiwan withdrew their opposition after previously expressing concern that the legislation would deal a big blow to the real-estate market in the south, which remains in the doldrums.
“They [government officials] told me that with the exemption clauses in place, the problems that I was worried about won’t happen. I will give them some time,” Greater Kaohsiung Legislator Huang Chao-shun (黃昭順), of the KMT, said by telephone after the legislation was enacted.
Huang previously suggested that the tax should be applied in specific areas only.
Speaking on the floor of the legislature yesterday, KMT Legislator Lai Shyh-bao (賴士葆) described the bill as “a big step forward toward social justice,” although he acknowleded that “not all inequalities and injustices in the country will be eliminated as a result.”
The fact that the proposal was supported by more than 70 percent of Taiwanese showed that it was the right time to introduce a tax on speculative transactions in the real-estate market, he said.
Lai said the new real-estate tax could serve as “a halfway point,” before the government is able to introduce a tax on property based on its sale price, also known as an ad valorem tax, as opposed to publicly announced values as is currently used.
Democratic Progressive Party (DPP) lawmakers did not try to block the statute when it was being reviewed, but voiced concerns on the floor afterward.
The imposition of the tax would certainly weaken the already sluggish housing market in Greater Tainan, said DPP Legislator Hsu Tain-tsair (許添財), who estimated that about 4,000 terraced houses would remain off the market for one or two years to avoid the tax.
As not all non-speculative transactions in the real estate market could possibly be be covered by the exemptions, the tax is certain to distort the market, Hsu said.
DPP Legislator Lee Chun-yee (李俊毅) said the legislation only served to help the KMT salvage its image of being powerless in the face of rocketing house prices and offered little help in establishing a sound mechanism for the real-estate market.
At a press conference held after the legislation was enacted, Finance Minister Lee Sush-der (李述德) said the plan might affect a limited number of households because the number of non-self-use residence transactions was between 20,000 and 30,000 a year.
He added that the tax would help bring unusually high prices in certain areas down to a reasonable level.
Lee expected the tax would generate NT$15 billion in annual revenues. The government is required by the statute to spend the additional tax revenues on social welfare programs.
At a separate setting, Ma thanked the legislature for passing the draft act, and promised to take more measures to narrow the wealth gap as it relates to housing.
“The passage of the draft act is a major step in our efforts to achieve justice in the housing market. However, this is not the only means of achieving this. The government will take more measures to tackle the issue and carry out our plan,” Presidential Office spokesman Lo Chih-chiang (羅智強) quoted Ma as saying.
When meeting with representatives from the Council for Industrial and Commercial Development at the Presidential Office, Ma said the luxury tax was aimed at cracking down on speculation, rather than influencing property values.
“We don’t want to see speculators benefit while home owners suffer, and levying the luxury tax is an effort to make the housing market return to normal and defend justice in the housing market,” he said.
The Ma administration also planned to provide more reasonably priced public housing and low-interest loans to young people wishing to own their own homes.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft