A tax reform plan early next year is set to impose a capital gains surcharge on property transactions based on combinations of buildings and land, Minister of Finance Chang Sheng-ford (張盛和) said yesterday.
Chang said the ministry might keep the property holding tax system unchanged to facilitate understanding and support.
“The plan has to be accepted by the public and must gain support from the legislature, so that it does not become another failed reform project,” Chang told a media briefing.
Chang said that the ministry is planning a series of conferences over the summer to canvas public opinion and to test the possibility of unveiling the draft proposal on the capital gains tax in next year’s first legislative session.
Chang did not specify a rate, base or scope of the planned tax, but said that the tax base might be a combination of the prices of a property’s buildings and land, which would be a departure from the nation’s existing property tax system.
Currently, the nation only levies a land value increment tax on sellers of property based on the current land value as assessed by the local government.
A government-assessed value is usually less than 50 percent of a plot’s market price, which has raised concerns over the justice of the nation’s tax system and has seen a rise in speculative transactions because of the relatively low tax burden.
Meanwhile, Chang said that the ministry would not change the holding tax system for properties in an attempt to help people better understand the process.
The nation currently has separate taxes for residential buildings and land values.
Earlier this month, the legislature passed a proposal to raise the house tax rate for non-owner-occupied residential properties to between 1.5 percent and 3.6 percent from 1.2 percent to 2 percent currently.
The current tax range for owner-occupied, or self-use, homes is to remain unchanged at 1.2 to 2 percent.
Chang gave the official definition of self-use residential properties yesterday as a property that is not rented and which is lived in either by the property’s owner, the owner’s spouse or close relatives.
In addition, the ministry might limit the number of residential properties that qualify for a lower house-tax rate as self-use to three properties per household, he added.
The ministry hopes to create a nationwide database of properties, which could help the tax bureau more easily conduct inspections, Chang said.
According to the ministry’s data, there is one household in the nation that owns 129 properties, which shows that some people have been buying houses for speculative purposes, Chang said.
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