Taiwan’s Luxury Tax Doesn’t Slow Property Sales
May 29, 2012 Taxation in Taiwan
TAIPEI – Taiwan’s attempt to subdue rising houses prices by implementing a luxury tax have not proven successful, with the newly instated levy failing to raise adequate revenues or control growing property values.
Over the weekend, Taiwan Realty released a report on the effectiveness of the luxury tax instated in the Taiwan on June 1st 2011, indicating that the system was not effective at controlling the rising house prices in Taiwan and only provides a minor disincentive to short terms trading of property.
The tax was aimed at curbing rising housing prices by taxing the sale of property which has been owned for less than two years, the tax was also applied to the sale of luxury items. However, according to the report, despite the tax, the cost of property in the cities if Taichung, Tainan and Kaohsiung has risen by 6 percent since the first quarter of 2011, while prices in Taipei, New Taipei City and Taoyuan-Hsinchu rose by 5.46 percent, 3.96 percent and 3.54 percent respectively.
Since the tax was first implemented, the Ministry of Finance has collected TWD 2.185 billion from the tax on the sale of property, and an additional TWD 1.21 billion from the sale of luxury items. Commenting on the realised revenues, the Ministry of Finance conceded that the tax has not generated the large streams of funds that were originally expected, but it has helped stem the occurrence of short term property transactions.
Analyzing the results in the report, the chairman of Taiwan’s Real Estate Brokerage Association Lee Tung-Jung said that it is now evident that the luxury tax can only suppresses short term speculative trade on the property market and cannot provide long term control on housing prices.
Photo by Hong Yong Lim