Worries over housing tax

Suggestions let fly by the Ministry of Finance to collect the housing tax have stirred up objections from many experts who challenge the foundation for such a plan. They argue that the reasons behind the ministry’s intention are not convincible.

As covered in local media, the Taxation Policy Department under the ministry has been assigned to flesh out the plan to collect the housing tax, especially those people with two or more houses. Those people with only one house will likely be exempted from this tax, but the tax rate will increase progressively from the second home. Deputy Minister of Finance Huynh Quang Hai says in Tuoi Tre that “the housing tax will surely be collected, not only to increase revenues for the State budget but also because the housing tax has been collected in many countries for long.”

Such an approach immediately draws fire.

In many countries worldwide, as reasoned by experts, the housing tax is often meant by the State to regulate the market so as to curb excessive speculation, thus ensuring healthy development of the property sector, beside the goal of generating more income for the State budget.

In Vietnam, they say, the Ministry of Finance needs to spell out its key goal - whether it is to earn more revenue or to intervene in the market - and needs to take a prudent approach in both cases.

If the primary goal is to create a new source of income for the State budget, a rethink is needed, since the burden of taxes and fees in the country is deemed to be already rather heavy for businesses and the people. Creating a new tax will make life harder for many people.

Meanwhile, if the goal is to introduce State intervention to ensure justice among all market players, the goal can hardly be realized if the tax is simply based on the number of houses one owns, and speculators will still have ways to ensure their profit margin by factoring the tax sum into their prices. That is to say the rich can still defend their wealth, while poorer people will suffer if housing prices climb due to the new tax.

In addition, a certain homeowner can have two or three houses, but the total value of their properties is far lower than one with only a big house in a prime location. In major cities, a big house in a good commercial quarter may cost hundreds of billions of dong, while a house on the outskirts is priced at hundreds of millions or less, and if the tax is imposed on multiple-home owners, then justice cannot be ensured. That is not to mention the vast difference between a home in a major city and another in the countryside.

As such, the housing tax – if it is to come into life – must be conceived in another way, and should be based on the value of properties as the core rather than merely the number of properties, besides a set of criteria scientifically mapped out to ensure that State intervention in the market will work to make life easier for the general public. It should stabilize the market rather than stirring up public worries.

Source Saigon Times Daily