The Ho Chi Minh City Department of Construction’s recent proposal to levy a tax on local residents’ houses in a bid to curb speculation in the real estate sector has ignited a huge uproar.
According to the department, the housing tax, in addition to the already imposed land tax, will help prevent property prices from skyrocketing, which would result in economic instability; while also increasing the state budget collection.
The housing tariff is expected to be a progressive tax, which means households holding larger land areas and possessing more houses will have to pay higher tax rates.
Earlier, a similar proposal was made by the Ministry of Construction, which would allocate each household a standard housing area of 100 square meters. Each square meter exceeding the norm will be levied a tariff of VND30,000 (US$1.44) a year.
However, the proposal has yet to be approved by the National Assembly, thanks to strong disagreement from the public, especially during this troubled economic time.
The housing tax is aimed at curbing house speculation, while in fact most speculators have been targeting land, not housing projects, members of the public said.
The straw that breaks the camel's back
Most real estate businesses said it is not the right time for the housing tax to be levied, according to Thanh Nien newspaper.
The property market has already been frozen for the last few years thanks to a huge number of difficulties, and this new tax is likely to completely destroy it, insiders said.
The housing tax will discourage housing investors, and also cause the prices of land and housing to soar, since the real estate sector already attracts many different taxes.
Meanwhile, Nguyen Van Duc, deputy chairman of the HCMC Real Estate Association, concurred with the idea of imposing a housing tax, but added that it is not the right time to apply the tariff.
The real estate businesses will continue to struggle for survival this year, and the new tax will only further dampen the market, Duc told Thanh Nien.
“The housing tax will be the last straw for the property sector,” he said.
An expert who wants to remain anonymous said that in order to stop land and house speculation, the government should simplify the administrative procedures in property investment to enable investors to increase supply, thus reducing property prices.
Once land and house prices have dropped, the public will have more chances to buy houses at reasonable prices, and speculators will no longer be able to function, he said.
For his part, lawyer Nguyen Van Truong, head of Truong law firm, said that it is unreasonable to repeat the housing tax discussion at this time, as the proposal has previously been rejected.
