Large property developers and experts on Thursday expressed divergent opinions over a draft amendment that the Executive Yuan approved earlier in the day with the goal of reining in real-estate speculation.
The Cabinet approved a draft amendment to the Income Tax Act (所得稅法) that would adjust the “integrated house and land sales tax” so that properties sold within certain periods after purchase would be taxed more.
Private individuals and institutions would face a 45 percent tax on property transaction gains on homes or land sold within two years of purchase — an extension from the current one year, while a 35 percent tax would be imposed on those who sell homes or land within two to five years of purchase, says the proposed amendment, which is to be submitted to the Legislative Yuan for review.
To more effectively crack down on short-term speculation, private individuals and businesses would be required to pay the same taxes in a bid to prevent individuals from setting up companies, which currently pay a 20 percent corporate income tax, the Executive Yuan said.
Huaku Development Co (華固建設) general manager Jason Hung (洪嘉昇) said in an interview that his company would continue to develop new projects as scheduled, despite the proposed changes.
As most Huaku customers buy homes for their own use, the new policy would not greatly affect the company, Hung said.
The company is planning NT$30 billion (US$1.06 billion) of housing and factory projects this year, while the figure for next year is expected to top NT$20 billion, he said.
Cathay Real Estate Development Co (國泰建設), another major developer, expressed similar views.
Chang Chin-oh (張金鶚), a real-estate expert and an honorary chair professor at National Tsing Hua University’s College of Technology Management, said that the new rules would be helpful, especially when individuals and corporate buyers are subject to the same, higher tax rate.
Jack Wang (王俊傑), general manager at Hiyes International Co (海悅國際開發) — a sales agent for local developers — said that the increased tax burden would be transferred to buyers and therefore do little to help curb soaring prices.
Jessica Hsu (徐佳馨), head of the research department at real-estate agency H&B Business Group (住商不動產), said that the policy would affect the market.
When investors’ profits are eroded, they are certain to shift capital to more profitable investments, Hsu said.
Democratic Progressive Party Legislator Wu Ping-jui (吳秉叡) said that he supports the Executive Yuan’s draft amendment to levy higher taxes on short-term speculators in response to high social expectations that the government should curb home prices.
Chinese Nationalist Party (KMT) Legislator Tseng Ming-chung (曾銘宗) called on the Executive Yuan to send a bill on imposing a property hoarding tax to the legislature to more effectively rein in the market.
However, Executive Yuan spokesman Lo Ping-cheng (羅秉成) said that large differences in housing prices across Taiwan make hoarding difficult to define.
If people who own more than four homes were targeted by a hoarding tax, as many as 780,000 tenants might be affected, Lo said.
“The main reason that the Executive Yuan did not propose such a tax is because of concerns that the burden would be transferred to tenants,” Minister Without Portfolio Kung Ming-hsin (龔明鑫) said.
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