Taiwan Today

The government is mulling a change in the way real estate taxes are calculated, according to Tsai Hsung-hsiung, minister of the Cabinet-level Council for Economic Planning and Development. Tsai made his remarks during an interpellation session at the Legislature’s Economics Committee Nov. 2, in response to Kuomintang Legislator Lee Ching-hua’s concern that inflated housing prices have created crushing burdens on the general public. The minister responded by saying that the pricing problem is not a nationwide phenomenon, but is only seen in the Taipei metropolitan area. The CEPD has recently invited several real estate experts and scholars to discuss the issue, he added. Many participants in the meeting suggested that all market information should be made available to the public to make it difficult to manipulate housing prices. However, the low holding costs of real estate properties, a result of low interest rates and property taxes, have made it easy to speculate on the local housing market. This has had a negative impact on the nation’s economy, the experts pointed out. Some have proposed that the government levy housing taxes based on current market values, rather than on the far-more conservative appraisals made by real estate assessment committees. Others have suggested that tax rates for houses in which the owners do not reside be increased. Still others have recommended that capital gain taxes be levied on any profits from real estate transactions. The minister said that there is room for discussion as to whether land appreciation taxes, land value taxes and housing taxes should be calculated based on market values. “The CEPD will conduct a full-scale review on the matter,” he said, stressing that no final decision has been made yet. Officials from the Taxation Agency under the Ministry of Finance admitted that it is indeed in the spirit of fairness to calculate real estate transaction gains based on current market values. However, difficulties exist as to the determination of market prices. There is also the possibility that parties involved in such transactions may enter into false contracts with lowered prices in order to avoid taxes. The agency does not believe that taxation can serve as an effective tool in suppressing skyrocketing housing prices. The recent price hike has more to do with capital inflows into the market than with the existing taxation system, the officials reasoned.(SFC-HZW)