Thursday , September 29 2022

Proposed new property tax divides opinions


A new property tax that authorities are considering to prevent land speculation has evoked a mixed response with developers opposing it, saying the market could be negatively impacted.

After the Ministry of Finance earlier this month solicited opinions on the proposal, most analysts VnExpress spoke to supported the idea of hiking taxes on property amid the surging prices and speculation.

Currently there is a land-use fee, with ownership of all land technically vesting with the government, and no property tax.

Dang Hung Vo, a former deputy minister of natural resources and environment, said now is the right time for a new tax on property, pointing out there is only a 0.03-percent tax on non-agricultural land, which is too low compared to 1-1.5 percent in other countries.

The low property tax has been taken advantage of by rich people to widen the wealth gap, he said.

For the tax to work, the government needs to ensure that the rich pay more for their property while the poor pay a low or even no tax, he said.

Since the doi moi economic reform in the 1980s, land prices have risen by 300-400 times, he said.

People are now pouring three or four times more money into land than business, he said.

“Land speculation has been rising, and prices have been surging, which are the main causes of inflation”.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said a property tax would ensure a fair and transparent real estate market.

But to tax property, the one-time land use fee buyers have to pay needs to be lowered from the current 10 percent of an apartment, 30 percent of a house and up to 50 percent of a villa, he said.

Other requirements are a system to list owners and all their properties, and ensuring that all property transactions are done through bank accounts, he said.

“The market needs to be regulated well before authorities consider taxing.”

Nguyen Van Dinh, chairman of the Vietnam Real Estate Association, said such a tax should have been imposed a long time ago to prevent speculation.

However, real estate industry insiders expressed concern about the tax proposal, warning it could affect the market.

The head of a real estate development company in eastern HCMC, who asked not be named, said the should prevent land speculation but not hamper the development of the market, which could have a knock-on effect on many other industries.

The CEO of a property developer in District 1 said the high annual land-use fee coupled with the new tax could become a burden on property owners.

Vo warned that people with many properties would try to delay imposition of the tax.

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