EDITORIAL: Raising Ownership Costs

To curb soaring housing prices, the government should revise the Land Tax Act (土地 稅法) to increase the cost of owning a property, as selective credit checks and the tax on real estate hoarding appear to have had an effect. limited from the central bank.

The surge in house prices over the past 10 months in eight regions – the six special municipalities, plus Hsinchu City and Hsinchu County – shows that the government’s fiscal policy is lacking teeth. Based on recorded transaction prices, house prices in Hsinchu City, the country’s technology hub, saw the largest increase of 30%, according to figures compiled by Addcn Technology Co.

House prices in six of the eight regions rose by more than 12%, with only Taipei and the new city of Taipei posting more moderate increases of 4.6% and 1.2% respectively, according to Addcn data.

Additionally, the number of people owning more than four homes climbed to 315,000 in 2019, up from 268,000 since the property tax came into effect in 2015, according to finance ministry statistics.

The main reason for hoarding homes is the cost of owning real estate. Taiwan is one of the few countries to impose a low levy on land and housing, with the increase in estimated land value lagging far behind the increase in real market value. Local governments are responsible for assessing land values ​​- the basis for calculating property taxes – but are reluctant to take the initiative and raise it due to concerns over public resistance.

As a result, the country’s estimated land value contracted 0.66% per year last year, representing only 19.79% of actual transaction prices that year and down from 20.02% the year. previous, according to data from the Ministry of the Interior. Last year, the Taichung city government even lowered the estimated value of its land by 20.06% from the previous year, deviating from central government efforts to curb the overheating real estate market.

Lawmakers called on the government to step up efforts to crack down on real estate speculation and hoarding by raising taxes. Taiwan only charges an effective tax rate of 0.06%, compared to 0.17% to 0.36% in Singapore, 0.2% in Japan and 0.66% to 1.37% in the United States Democratic Progressive Party lawmaker Kuo Kuo-wen (郭國文) said at a meeting of the legislature’s finance committee yesterday.

Kuo urged Finance Minister Su Jain-rong (蘇建榮) to push local governments more to increase the land hoarding tax and increase the estimated land value.

Su said the ministry plans to impose new regulations to allow it to review changes in local government tax rates. While local governments have the right to adjust and collect a housing tax rate, some have left the tax unchanged for nearly a decade, Su added.

The ministry is working on a new rule to raise the threshold for the upper-end hoarding tax by 3.6%, Su said. The ministry currently levies a tax of 1.5 to 3.6 percent on non-residential housing and allows local governments to add their own taxes, capped at 30 percent.

Although local governments are responsible for adjusting land values ​​and property tax, the central government should check whether these levies are reasonable and how the property market is absorbing changes in tax policy.

To effectively curb a seemingly uninterrupted rise in house prices and bring the estimated value of a property closer to its market price, the government should revise the property tax law to stipulate that the assessed property value should be adjusted based on market prices. changes in market prices. Raising the cost of owning real estate should be an effective way to contain real estate speculation and soaring prices.

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