Luxury tax revenue assessed at NT$15 bil. per year: official
March 2, 2011, 11:25 am TWN
TAIPEI, Taiwan — A proposed tax on speculative residential real estate transactions and sales of expensive goods and services is expected to generate NT$15 billion in annual tax revenues, Deputy Finance Minister Chang Sheng-ford said yesterday.
The money will be used for social welfare programs to help the disadvantaged, Chang told a press conference at the Legislative Yuan on the government's plan to impose the so-called luxury tax in an effort to narrow the widening wealth gap and curb property speculation.
Chang was invited by several ruling Kuomintang lawmakers to explain in public what the luxury tax is and how it works, amid heated public debate on the issue since the plan came to light last week.
He explained that the tax should be called a “selective sales tax.”
According to the ministry's initial plan, he went on, real estate transactions, including land and non-self-use housing units, within less than one year of their purchase, will be subjected to the proposed tax at a rate of 15 percent of the actual transaction price.
The rate will fall to 10 percent for properties sold in the second year after being purchased, and will not be assessed if owners hold on to the properties for more than two years, Chang said.
In terms of valuable consumer products and services, such as cars, aircraft and yachts priced at more than NT$3 million, as well as fur and leather products valued at NT$500,000 or higher, sales will be taxed at a rate of 10 percent.
The 10 percent tax will also be imposed on club memberships worth more than NT$500,000, Chang said.
The tax will only affect the roughly 5 percent of the population at the top of the consumer pyramid. In addition, the data on property transactions in the past three years shows there were only around 20,000 non-self-use housing units and 40,000 plots of land that changed hands within two years of their purchase during that time, the official noted.
“Tax income is not the goal,” he said, pointing out that there will be no income from the proposed tax if speculation trading is stemmed.
According to Chang, the Ministry of Finance was scheduled to hold a conference on its draft legislation concerning the new tax March 3.
The bill will be delivered to the Executive Yuan for approval between March 10-15, and is expected to be sent to the Legislative Yuan before the end of March, he noted.