The latest edition of the draft combined housing and realty tax submitted by the Ministry of Finance to the Executive Yuan on Thursday was panned by the Housing Movement yesterday as perfunctory reforms and a capitulation to the corporate groups who have won the construction projects.
The version moved away from a floating rate capped at 45 percent and leaned toward lighter taxation at a flat rate of 17 percent that reportedly applied only to housing bought after 2011.
Tax returns would apply if requirements, such as being less than NT$20 million (US$630,457) in total value, are met and properties may also be eligible for reduced tax or even tax exemption, the ministry said on Friday.
Photo: Liu Hsin-de, Taipei Times
Housing Movement spokesperson Peng Yang-kai (彭揚凱) yesterday told a news conference that the group was shocked at the decision, as it differed from what members had heard from a meeting with Minister of Finance Chang Sheng-ford (張盛和) on Wednesday.
The flat rate of 17 percent is stealing from the poor to feed the rich, Alliance for Fair Tax Reform convener Wang Jung-chang (王榮璋) said.
The core of the original reforms was based on the principle of less wealthy people paying less in taxes, while wealthy people would pay more, Wang said.
However, this version would result in the average resident who would pay less than 17 percent tax being forced to pay 17 percent, while those who would pay from 20 to 45 percent would enjoy a tax reduction, Wang added.
National Chengchi University land economics department professor Chang Chin-oh (張金鶚) said that the ministry’s decision to impose a flat rate of 17 percent is hard to accept.
The decision departs from the original purpose of the tax reforms, which was to levy heavier taxes on those with three or more real-estate properties to their name, Chang Chin-oh said.
Facing pressure to address skyrocketing property costs, the government has promised to overhaul the property tax system by imposing a progressive rate to levy actual profits earned from transactions of houses and plots of land.
Under the current system, a land value increment tax applies to the land, while taxes on houses are based on assessed value, which is typically much lower than transaction values.
National Taipei University professor Peng Chien-wen (彭建文) said that the revised proposal would be less effective in influencing the housing market than the current so-called “luxury tax,” which has been in place since 2012 to stop short-term property speculation by charging owners from 10 to 15 percent of the transaction prices if they resold homes within two years of purchase.
Taxpayers’ rights to live in their own houses and the intent to crack down on land speculation are being ignored, Peng Chien-wen said, adding that the Chinese Nationalist Party (KMT) government did not seem to understand the demands of the public and was instead becoming cozier with corporations.
The Housing Movement said it would start calling for a face-to-face meeting with the leadership of the KMT and the Democratic Progressive Party, asking their opinions on tax reforms as well as inviting them to say whether they supported the tax decrease and sided with big corporations, or supported cracking down on real-estate speculation.
The movement said that unless the ministry revises its proposal, it would not rule out large-scale reform movements this year.
Chang Sheng-ford yesterday said the ministry thanked the public for offering criticism on which it would base future revisions.
Additional reporting by Shih Hsiu-chuan
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