Luxury Tax Pros Outweigh Cons

Luxury Tax Pros Outweigh Cons
China Times editorial (Taipei, Taiwan, ROC)
A Translation
March 2, 2011

The luxury tax, as it is commonly called, is a special sales tax on certain goods and services. Last Thursday, after the Ministry of Finance reported to President Ma, the draft law for the luxury tax was officially finalized. President Ma is determined to promote the bill, in order to discourage speculation in the housing market. We heartily approve of his move. But the bill needs to be promoted within the legislature. We feel the need to issue a warning. In the short-term the housing market and the economy may be negatively impacted. The government must be psychologically prepared, and ready with a response. It must persist in its efforts at systemic reform.

The luxury tax draft law imposes a 10% luxury tax on automobiles costing over three million NT, on private planes, yachts, and on country club and golf club memberships costing over 500,000 NT. But it is another problem that most concerns the public. That problem is speculation in housing units, building sites, and commercial buildings not intended for personal use, which are sold less than two years after purchase. These will be subject to a 10 to 15% transaction tax. The purpose of this tax is to discourage speculators from creating bubbles in the housing market.

Domestic housing prices began soaring in 2008. They retreated slightly due to the financial tsunami, but then shot straight up again. By the end of last year, housing prices in Taipei had increased 11.1 times. Housing prices in Xinbei City had increased between eight and nine times. The average price of housing units in Taipei City has soared to 700,000 NT. The numbers are at record highs. Three point six million salaried workers earn less than 30,000 NT a month. Finding a house within the metropolitan area to settle down in has become a far off dream. High housing prices have long been the number one source of pubic discontent.

Residential units should resume their normal function, as places to live. Housing prices should increase at roughly the same rate as income. But that is not what we have today. Incomes have remained static, while housing prices have skyrocketed. Between 2008 and the end of last year, average housing prices in Taipei increased 20 percent. Prices in some of the most desirable areas increased over 50 percent. Based on the low point of the current real estate business cycle, prices have more than doubled. Prices in some areas in Xinbei City, in satellite cities such as Xinzhuang, have doubled in one or two short years. The reason is low interest rates and easy money. These enable the growth of asset bubbles. The "investor friendly" domestic housing market system fuels speculation. This is an important contributor to rising prices.

They system does not impose a capital gains tax. Hundreds of speculators have pocketed tens of millions speculating in the housing market. The tax system favors such speculation. Anyone with a little money will see the housing market as an ideal channel for the pursuit of windfall profits. The result is that amidst rising housing prices, speculators spring up like mushrooms. They invest, and contribute to further housing price rises. Such cycles often end in crashes. Industry insiders estimate that over half of all metropolitan area housing sales involve speculation. This gives us some idea of the "contribution" of speculators to the housing market.

The government has introduced a luxury tax targeting housing market speculators. Housing market speculators are the main force pushing up housing prices. They are the real reason ordinary people cannot afford housing. We feel that addressing this problem is helpful. The ideal remains taxation based on a comprehensive assessment of the market price. Ultimately, income from the sale of housing should be integrated into capital gains taxes. But this is a good first step.

The Ministry of Finance's current draft applies only to residential property and construction sites not for personal use, sold less than two years after purchase. Only these will be subject to the luxury tax. Sales made within one year will be subject to a 15% tax. Sales made within two years will be subject to a 10% tax. We think that is reasonable. The impact is limited to housing speculators alone. and will have no impact on most people. But the Ministry of the Treasury should consider lengthening the time frame to three years. Sales made within three years should be subject to a luxury tax of 7%. Most speculators divest themselves of their investments within three years. They tend not to hold on to them for more than five years. For example, the infamous Lien Ching Xinyi building site changed hands in just over two years. In little over two years, it earned nearly 1.5 billion NT in profits. A five year limit may be too harsh. But three years is more reasonable, and should be consistent with the workings of the marketplace.

If the luxury tax bill is approved without opposition and becomes law, it will discourage speculation in the housing market. The number of speculators in the housing market will diminish. Demand will decline, and prices will decline. As a result, the number of people in real estate related industries, including construction companies, real estate brokers, interior decorators, and even others on the margins will decline. The financial sector may need to bear some bad debts. But the financial sector, under central bank direction, imposed risk management controls long ago. Therefore the repercussions will be minimal. But regardless, the overall economy may be affected. The government should be psychologically prepared for the economic and industrial impact of the luxury tax. It must not suddenly announce the suspension of tax in the event the housing market declines, and the economy slows.

Frankly, the current wave of soaring real estate prices is a departure from economic fundamentals. Many above board construction companies are disgusted by it. They fear it will lead to a major crash. The government must curb speculation. In the short term that may affect the housing boom. But in the long term, it will ensure sustainable development in the housing industry. It will avoid the recurrence of a housing market bubble. We hope the government has both the will and the way to discourage speculation in the housing market. We hope members of the legislature will support the bill. Housing speculators boast that "Legislators are mouthpieces for construction firms. The luxury tax will not make it through the legislature." We hope that legislators will prove them wrong.

奢侈稅短空長多 該堅持到底
2011-03-02 中國時報

俗稱「奢侈稅」的「特種貨物與勞務銷售稅」草案，上周四在財政部向馬總統報告後，正式拍板定案。對馬總統決心推動這個以壓制房市投機為主的法案，我們深表肯定。不過，對後續法案的立法推動，我們也必須先提出警示，短期內房市、經濟可能受影響而向下修正，政府必須有心理準備及因應措施，同時對此制度的推動堅持到底。

奢侈稅草案中，雖然對三百萬元以上汽車、私人飛機、遊艇；五十萬元以上的高級俱樂部、高爾夫球等都加徵十％的奢侈稅，但其核心、同時也是社會最關注者，當屬對二年內頻繁買賣非自用住宅、建築空地、商業大樓者，課以十％到十五％的交易稅。後者主要是為抑制因投機客炒作導致房價飆漲的畸形現象。

國內房價從二○○八年開始飆漲，中間因金融海嘯而小幅回檔，接著又看回不回的直線上升。去年底台北市的房價所得比已達十一．一倍，新北市亦達八．九倍，北市預售屋平均價格已飆破七十萬元，所有數字都創新高。對三六○萬月入不到三萬元的上班族而言，在都會區購屋找到安身立命之住所，成為遙不可及的夢想。高房價一直是「民怨之首」，其來有自。

在住宅回歸其「居住功能」的正常情況下，房價與所得應該成相同比例的成長，但現在的情況則是：所得紋風不動，房價卻不斷飆破天價。從二○○八到去年底，北市平均房價上漲近兩成，部分菁華區域則上漲到五成以上。如果從這波房地產景氣循環的低點起算，則價格上漲超過一倍；部分新北市區域如新莊副都中心等，更是在短短一、二年內漲了一倍。究其原因，除了市場利率低、資金寬鬆，有利各種資產泡沫成長外，國內房市交易制度「對投資客友善」，更是助長投機、讓房價高漲的重要因素。

在不課徵資本利得稅的制度下，動輒數百上千萬的賣屋所得，幾乎全由投機客落袋。如此友善又一本萬利的房市課稅制度，稍微有資金者自然視房市投機為追求暴富的最佳投資管道。結果是房價上漲聲中，投機客如雨後春筍的冒出、投入，然後又再進一步助長房價上漲，這個循環最後往往以大崩盤作收。由業界估計都會區房屋買賣交易中有五成以上是投機客所為，即可窺知投機客對助長房市上漲的「貢獻」。

因此，對這次政府推出奢侈稅，目標對準房市投機客，我們認為對匡正房市這種以投機客為主力，推升房價，然後造成真正有居住需求的庶民望屋興嘆的畸形奇景，應有相當的助益。雖然距離全面以市價課稅，買賣房屋所得納入綜所稅課資本利得稅的理想，仍有相當距離，但至少是跨出了一步。

目前財政部訂定的草案中，把範圍侷限在二年內的非自用住宅、建築用地等買賣，才需要課以奢侈稅（一年內課十五％，二年內課十％）。我們認為已相當合理，其影響與打擊範圍已限縮到完全針對房市投機客，對大部分民眾可說毫無影響。不過，我們認為財政部仍應考慮再提高課奢侈稅的年限，增加到三年內課以七％的規定。坦白說，一般投機客與養地者，大部分以三年內脫手為目標，最久不超過五年。例如著名的聯勤信義土地，轉手時間大概是二年多，二年多獲取近三十五億元的利益。如果訂五年或許過於苛刻，三年應屬較中庸且「合乎市場運作」。

如果奢侈稅順利推動，完成立法，且發揮其打擊房市投機的效果，可想見必然發生房市投機客減少、房價需求減少、房價下滑；影響所及，房地產關聯產業─從第一線的建設公司、房仲業、房屋裝潢、甚至較周邊的代書，都會下滑；金融業則可能會承受到部分呆帳，不過金融業因央行及早出手調控做風險控管，問題相對較小。但不論如何，整體經濟可能受波及，政府對此奢侈稅在經濟與產業上的後續效應，應有心理準備及因應措施，萬不可看到房市下滑、景氣趨緩，又慌慌張張的宣布「暫緩推動」。

坦白說，這波的房地產飆漲已背離經濟基本面，連不少正派的建設公司都看不下去，憂心再走下去就是大崩盤。政府此時推動抑制投機的方案，短期固然影響房市景氣，但長期而言，卻是讓房地產業能永續經營，而不是在暴漲暴跌的泡沫中輪迴。期望政府能有決心、有方法，在抑制房市投機上收到成效；更希望立法院諸公能支持此法案，不要真被房市投機大咖講中─「立委都是財團建商代言人，奢侈稅過不了立法院」。