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Thursday,  Dec 14,2017,15:11 (GMT+7)

HoREA voices concern over property tax in HCMC

Cao Ban
Monday,  Nov 20,2017,18:08 (GMT+7)
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HoREA voices concern over property tax in HCMC

Cao Ban

A view of Ham Nghi Boulevard in downtown HCMC seen from the Bitexco Financial Tower. A pilot scheme to tax land and landed properties in HCMC would help increase budget revenue but leave adverse effects - PHOTO: TL

HCMC – A pilot scheme to tax land and landed properties in HCMC would help increase budget revenue but leave adverse effects, such as land and apartment price spikes, according to the HCMC Real Estate Association (HoREA).

Many countries apply assets tax, mostly to land and landed properties, to create a source of stable revenue for governments, said HoREA. For example, the U.S. state of California levies a 1.23% annual tax on asset value.

However, according to HoREA, Vietnam’s real estate market is just recovering. Home prices are still high, around 25 times higher than the average income of the Vietnamese.

The middle class in HCMC is expanding rapidly and gross domestic product (GDP) per capita is over US$5,000, which is forecast to exceed US$10,000 by 2020. However, living costs in HCMC are higher than in other provinces.

HoREA proposed the National Assembly delay the pilot scheme in HCMC until after 2020. If approved, the scheme should apply nationwide.

High prices of land and apartments are partly caused by tax and land use fee, said HoREA chairman Le Hoang Chau, adding the land use fee is not a tax but it is a huge source of State revenue.

The land use fee accounts for less than 10% of an apartment’s value, 30% of a townhouse’s and 50% of a villa’s. If property tax is applied, the land use fee should be cut, Chau proposed.

He said the property tax in HCMC would make financial obligations of property owners heavier, driving away investment.

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