A fair property tax system, public housing, development of rental housing and large-scale urban regeneration will be the four pillars of the Democratic Progressive Party’s (DPP) housing policy, the party said yesterday in the run-up to January’s presidential election.
In a press conference unveiling DPP Chairperson and presidential candidate Tsai Ing-wen’s (蔡英文) vision of how to deal with the housing problem — seen by many as one of the most urgent domestic issues — the DPP said it believed the proposed tax reforms would be able to stabilize Taiwan’s surging housing prices, while well-planned public housing projects would satisfy the demands of young and disadvantaged people.
Tsai has the ambitious goal of increasing the share of public housing in Taiwan to 10 percent, said former Council for Economic Planning and Development vice chairman Chang Ching-sen (張景森), one of the authors of the DPP’s housing policy.
Chang estimated the 10 percent goal represents 250,000 households in Taipei and New Taipei City (新北市).
Contrary to what the government has been doing in the past, public housing would not be sold to citizens, Chang said, adding that rental housing is the preferred option for most citizens so that affordable housing can be allocated to young people, the elderly and financially challenged households.
The new administration would be more likely to offer government subsidies for rental expenses, rather than mortgages, Chang said.
To do that, Tsai plans to launch large urban regeneration projects, which will be exclusively funded by the central government, to secure land that can be used for public housing, he said.
The much-discussed property transaction income tax is the other critical part of Tsai’s policy, which adheres to the view that a fair tax system can prevent people from making unreasonable profits through speculation on the property market, which is the case now in Taiwan, Chang said.
The tax reform would aim to establish a database of transparent property transaction records and terminate unreasonable tax categories, such as the land value increment tax as well as the luxury tax.
Hua Ching-chun (花敬群), a finance and banking professor at Hsuan Chuang University who is a member of Tsai’s policy-consulting panel, said that Taiwanese shoulder one of the heaviest burdens in the world in terms of housing prices.
“Why? Because the tax rates on property transaction and property ownership are among the lowest in the world, and that encourages speculation,” he said.
Tsai’s campaign does not encourage policies that would create asset bubbles to drive up economic growth, as the current administration is doing, he said.
In response, the Ministry of the Interior described Tsai’s social housing agenda as “impractical” and questioned its feasibility and necessity.
“[Tsai said] that 10 percent of all housing units should be dedicated to social housing. However, I think her idea is impractical,” Deputy Minister of the Interior Chien Tai-lang (簡太郎) told a press conference.
“First of all, there are 8 million housing units in the entire country. Ten percent of that would be 800,000 units. If each unit costs NT$5 -million [US$172,000] to build, then the total budget would be NT$4 trillion,” Chien said. “Tsai didn’t clarify where the money would come from — is she going to raise taxes, or is she going to implement the policy on debt if elected?”