During a May 25 meeting to discuss the draft Law on Land and Housing Tax, National Assembly (NA) deputies still wondered about the law’s ability to guard against speculation.

VietNamNet Bridge – During a May 25 meeting to discuss the draft Law on Land and Housing Tax, National Assembly (NA) deputies still wondered about the law’s ability to guard against speculation.

The draft law presented to the NA on May 25 was not much different from the draft discussed by the NA Standing Committee in mid-March. Accordingly, houses are not subject to land and housing tax, reasoning the lack of conditions for implementation, the people’s disagreement and low estimated revenues compared with high collection costs. The law, therefore, will be named “Law on Non-Agricultural Land Use Tax.

Compilers expected the law can help curb speculation, with tax rates of 0.03 percent to be imposed on land area within limits, 0.06 percent on the land area which exceeds the limit less than 3 times, and 0.1 percent on land area which exceeds limits over 3 times.

The tax rates on non-agricultural land used for business and production will be 0.03 percent and 0.1 percent for land that is used for wrongful purposes.

The NA Standing Committee proposed that in cases that one person owns several plots of land, the tax on non-agricultural land will be imposed on the total area of land within a province or city owned by that person, not the total land owned in Vietnam.

Some deputies still insisted on applying a housing tax. Deputy Vu Hong Anh from Hanoi observed that this is because most apartments are now held by speculators, so housing taxes are necessary. Deputy Le Dung from Tien Giang agreed, adding: “I think a housing tax is a tax on assets. It is rational to collect housing taxes from high-income earners.”

Deputy Tran Du Lich from HCM City analyzed the situation: “We don’t levy housing taxes and we think that is the way to protect the people. However, a person who inherits a low-roofed house with a garden from his parents, but the garden area is three times over the limit, must pay a tax rate of 0.1 percent, equivalent to the tax rate paid by land speculators. Is it fair to people who have only one house but still must pay the same tax rate as speculators? You said that you don’t tax housing, but that tax on land is higher than the housing tax.”

Some deputies also suggested raising tax rates on areas that exceed the limit to fight land speculation. Deputy Le Quoc Dung from Thai Binh emphasized the weaknesses of this draft law in preventing land speculation.

Finance Minister Vu Van Ninh explained that the draft law only imposes tax on land, not housing, because the value of houses is attached to the position of land and the ultimate value of homes is tied to the value of the land. He stressed that speculators buy houses for their valuable land position.

Chair of the NA’s Committee for Finance and Budget Phung Quoc Hien also commented that this draft law should concentrate on land-related issues, not housing. “Houses, owned by investors or people, are subject to many kinds of taxes. For example, when they buy bricks, cement or steel, they have to pay value-added tax already,” he remarked.

Hien also noted that while Vietnamese people’s living standard is not high and the per capita housing area is low, a housing tax will not encourage people to build houses.

“The new point in this law is taxing the total area of land owned by one person. Currently, land owners only pay tax for each plot of land, which is lower than tax rate on the total area of land. Speculators will have to consider this aspect,” Hien concluded.

PV