Many opinions agree with the draft Law on property tax

Property taxes accounts for an average of 3-4% of total tax revenue in developed countries. Picture: ST.

Not tax at market price

In the draft of Ministry of Finance, the taxable price for residential land and housing is chosen according to the plan, the price of 1m2 of land at the land price table published by the provincial People's Committee at the time of tax calculation, not to tax under the price of market. With the same house price, new built house, price of 1m2 for taxable house at every level, type of house decided by the provincial People's Committee in accordance with the law on construction at the time of tax calculation. For used houses, the price of 1m2 of taxable house is determined by the price of 1m2 of new buildings at each level, and the grade of house shall be decided by the provincial People's Committee according to the law on construction at the time of calculating the tax multiplied by the percentage (%) of the remaining quality of the house issued by the provincial People's Committee according to the duration of use of the house at the time of tax calculation. This content is an important part of the draft because it is the formula for setting the price to pay taxes. the evidence is that over time, there are many opposite opinions around this content.

TS. Nguyen Duc Do, deputy head of the Institute of Financial Economics and Finance, said that the Ministry of Finance should have a thorough explanation, avoiding public misunderstanding about this issue. By the rules, there will be a difference between the price of the State and market prices, depending on different positions there will be different values and taxes. In the draft and press response, the leaders of the Tax Policy Department have stated quite well, but it is necessary to strengthen propaganda.

In this regard, the Ho Chi Minh City Real Estate Association (HoREA) - the sectors sending their comments also agree to determine the price of 1m2 of taxable land with the price of 1m2 of land at the land price list promulgated by the provincial People's Committee, a proposal from the Ministry of Finance. According to Le Hoang Chau, chairman of HoREA, the calculation will ensure transparency. At the same time, the calculation of the difference between new home prices and used house prices, as well as draft of law has also been approved by the association. However, the association proposed mechanisms to avoid harassment when assessing the percentage (%) of remaining quality of used houses.

From calculating the taxable price to the threshold of paying the tax, the Finance Ministry will elaborate the plan on the applied property tax rate to dwelling houses according to two ways, using the non-tax threshold of VND 700 million or VND 1 billion.

According to Dr. Nguyen Duc Do, the policy should initially aim at taxing high-income people. The suggestion of taking a non-taxable threshold for a home according to the value, according to Nguyen Duc Do, is appropriate, but the starting level needs to be increased to first affect the rich, such as the tax on individual income. The proposed draft law would affect the majority of middle-income people, which should be considered more appropriately and in a certain way.

Meanwhile, despite agreement with many proposals of the Ministry of Finance, with the tax threshold of HoREA, it also proposed to apply the tax rate of 0.4% for residential land, land for construction of apartment buildings, housing value of over 1 billion, it is considered that the living standard of people is low compared to other countries. HoREA agrees not to tax the second home. Thus, in order to avoid negative impact on the rental market, the tendency is to choose the rent of various classes in the society. In addition, there are cases that a person has only one house, but it is very high value such as villas and mansions without taxing property, if compared with people who have 2-3 houses but the total value is low, It is unreasonable and unfair to pay taxes on many homeowners.

Not to offset the budget

Some comments were issued when reading this bill. It is suggested that the State wants to offset the budget because of the tariff reduction schedules under the FTA are in the final stages, however, many other opinions express disagreement.

A study of international experience shows that property taxes (annual taxation, asset use) in countries represent an important part of total national revenues, on average 3-4% of total tax revenues in developed countries, some countries up to 8% as in Japan. In developing and transition countries, this rate is lower. In the 2005-2013 period, the share of property tax in relation to GDP in developed countries and some developing countries in Asia was about 2% of GDP. Land tax rates in some countries such as Korea; 0.2% to 0.5% for land (4% for golf course and land for construction of luxury tourist sites); from 0.1% to 0.4% for housing (villa 0.4% only); 0.4% for golf homes and luxury services; 0.5% for residential buildings (new plants are built in areas with high population density of 250%); 0.25% for other purpose buildings. In addition to property taxes, Korea also levies property taxes ranging from 0.5% to 2% on land that exceeds thresholds. Taiwan receives from 0.2% to 5% depending on the type of land, area; from 1.2% to 2% for condominiums; 3% to 5% for houses and buildings for commercial purposes. Singapore is from 4% to 16% of the value of the house, the land exceeds the threshold (in which the commercial, industrial and land 10% and the value below the threshold not subject to tax). Philippines accounts for 2% in Manila, 1% in other provinces for housing, business, residential land, construction land. Japan: 1.4% to 2.1% for houses and land. Finland: 1.2% to 2% (exclusive of commercial, industrial, residential land in excess of US $ 29,200 apply 2% + 30% of 2%). Indonesia property tax is 0.5% for houses, land worth over Rp 8 million. Cambodia provides a 0.1% real estate tax on land, housing, buildings and buildings on land valued at more than 100 million SD in some cities. Brunei does not levy tax on land, only tax on houses (including commercial houses) at the rate of 12% of the value of the lease.

According to Truong Thanh Duc, Chairman of the Board of Members of Basico Law Firm, asset tax in many countries is considered as an important source of revenue in the budget, so some countries have applied it for a long time. However, they are developed countries, their good socialization and they collect taxes to reinvest in social welfare. In Vietnam, the drafting agency should consider the time of implementation, the manner, the scope and the applied subject, especially to determine how well the people's incomes are doing and how to evaluate tax reasonably.

Talking to the media over the weekend, the Finance Minister also reiterated that the introduction of property taxes aimed at many goals, not simply to offset the budget. According to him, the draft was launched with the first goal of strengthening property management. Second, improving the efficiency of home and land use. Along with that the restriction of wasteful use of property, resources of land and property are necessary. Third, ensuring transparency in the management and use of assets, all of these significantly contribute to the prevention of corruption. Finally, if the law is passed, it will partly expand revenues to the state budget and ensure revenue restructure.

The comments around this bill are being received and synthesized by the Tax Policy Department - Ministry of Finance. After the expiry of the time limit for obtaining the opinions, the Ministry of Finance will explain, accept and submit to the Government in order to register and issue the Property Tax Law into the legislative program for the subsequent year.