Saturday , January 28 2023

HCMC wants to tax second homes to boost budget


Ho Chi Minh City authorities have proposed a trial plan to collect taxes on second properties to create more funds for the municipal budget.

In a draft proposal suggesting trial development policies for Ho Chi Minh City, the municipal People’s Committee said the city’s income could be increased by collecting taxes for land use and property ownership on property owners who own more than one piece of real estate.

This is common practice in many countries, but it’s new to Vietnam.

The idea is to prevent speculation, the abandonment of property and the waste of resources.

Vietnam currently levies no tax on a property owner’s second (and third, etc) home or piece of real estate.

The draft also proposed collecting other property fees on a trial basis.

The city also wants to retain at least 21% of the local government’s budget annually for the next three years. The city once got to keep 18% of its budget, but the ratio was raised to 21% this year.

More local authority

The city document also proposed new mechanisms and procedures for a host of activities, including investment management, land transfer and the selection of contractors and investors.

Each new proposal is geared towards mobilizing more resources from the private sector by making local rules more attractive and simple.

HCMC authorities want to manage aspects of larger metropolitan governance that normally lie within the jurisdiction of the central government, such as forming more detailed initiatives for larger urban planning projects, and more authority over the construction of commercial and social real estate, as well as certain types of houses and homes.

City leaders argue that by being granted more autonomy, they’ll be more proactive in spurring city growth and be able to make management simpler for the central government by relieving it of many local burdens.

HCMC sent the proposal to the central government after the Communist Party’s decision-making Politburo agreed that a pilot autonomy scheme for the city be extended.

Vietnam’s parliament, the National Assembly (NA), in 2017 passed Resolution 54, effective January 2018 to the end of 2022, which granted HCMC extra autonomous decision-making powers over issues including certain taxes, equitization of state-owned enterprises, and policies to attract talents.

But actual implementation was slower than planned.

In October, the government asked the NA to allow the city another year with the autonomy policy.

It argued that the city had spent the first year developing plans and making other preparations. Then, it was heavily affected by the Covid-19 epidemic for two years (2020 and 2021), so there was not much time to fully promote mechanisms and policies.

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