Sat, Mar 05, 2011 page12

• Lawmakers welcome luxury tax

  BROAD SUPPORT: Ruling and opposition legislators voiced support for the tax bill, although one member of the Finance Committee said he would vote it down

  • By Crystal Hsu / Staff Reporter
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  Ruling and opposition lawmakers yesterday welcomed a proposed luxury tax aimed at stemming property speculation, but said there was a need for extra conditions to prevent an unnecessary negative impact on the economy.

  The lawmakers’ remarks came after the Ministry of the Interior released a report showing that property purchases nationwide rose to their highest level in almost three years in January, despite the government implementing a series of measures designed to cool the property market.

  Chinese Nationalist Party (KMT) Legislator Sun Ta-chien (孫大千) said he would support the luxury tax plan, but that it might require minor revisions when the Cabinet submits the draft to the legislature.

  Sun, whose constituency is in Taoyuan County, said property fever is limited to Greater Taipei and parts of central and southern Taiwan, and the tax should target those areas alone.

  The government has proposed imposing heavy taxes on short-term purchases of property, subjecting deals to a 15 percent tax if the property is sold within a year of being purchased and 10 percent if it is sold within two years.

  “House prices in many parts of the country have not increased that much,” Sun said. “It is worth discussing whether to limit the tax to areas with unreasonably high house prices.”

  Alex Fai (費鴻泰), another KMT lawmaker and the convener of the legislature’s Finance Committee, said he fully endorsed the luxury tax, as long as the bill does not apply retroactively.

  “A selective implementation would weaken the levy’s intended effect,” Fai said by telephone.

  However, Fai said he would invite Council for the Economic Planning and Development Minister Christina Liu (劉憶如) to speak to the committee and elaborate on her ideas for an exclusionary clause.

  Liu has suggested the need for an exclusionary provision for short-term property transfers because of relocation, job changes and other non-investment purposes.

  “If an exclusionary clause is both desirable and feasible, I’m willing to consider it,” Fai said, adding that he would start the review once the bill has been sent to the committee.

  The Democratic Progressive Party (DPP) also gave its backing, but DPP lawmakers doubted whether the tax could effectively narrow the income gap or curb property speculation.

  “We support the luxury tax in principle, although we have yet to see the bill,” DPP legislative caucus whip Gao Jyh-peng (高志鵬) said.

  However, Gao said the levy would only serve only to add a slight financial burden on the rich.

  “The government should tax capital gains if it is serious about distributing wealth more equitably,” Gao said. “Any measure short of that is nothing more than just words.”

  Non-Partisan Solidarity Union Legislator Kang Shih-ju (康世儒), another member of the Finance Committee, said he would vote down the luxury tax on the grounds it may hurt the property sector and other industries, while failing to check speculation.

  Kang said Hong Kong and China have both introduced tighter measures, but have failed to bring down real estate prices.

  The latest government report showed that property transactions nationwide totaled 41,974 in January, the highest since May 2008 and the fourth straight month above the 40,000 level.

  Stanley Su (蘇啟榮), head researcher at Sinyi Realty Co (信義房屋), attributed the figures to strong demand fueled partly by a market correction, but he said trading volume was likely to have peaked and could head downwards in the coming months.

  “Potential buyers will wait and see until the tax plan is settled,” he said.
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