Should we pilot a second real estate tax collection in Ho Chi Minh City?

Should we pilot a second real estate tax collection in Ho Chi Minh City? 3
Should we pilot a second real estate tax collection in Ho Chi Minh City? 3

Ho Chi Minh City has just proposed a policy to pilot tax collection on land use rights and ownership of assets on land of second or more real estate.

A representative of the Ho Chi Minh City Department of Finance told VnExpress that so far the city has not come up with a specific plan on this issue.

In fact, this is not the first time a second real estate tax has been discussed.

Central area of Ho Chi Minh City, District 1, November 2022.

This time, when the tax pilot was proposed by Ho Chi Minh City, there were still conflicting views.

Associate Professor, Dr. Nguyen Khac Quoc Bao, Vice Principal of the University of Economics Ho Chi Minh City (UEH), said that taxation will contribute to returning real estate value to its true value.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA) also sees taxes as an effective tool that can regulate the economy and real estate market in addition to credit and planning tools.

Sharing the same opinion, rental real estate expert Le Quoc Kien believes that if implemented, this will have a very strong impact on scalping investors and real estate properties that have no real use value.

According to Mr. Kien, psychologically, buyers will be careful to see how the new law affects them, which directly reduces demand in the short term.

In the long term, the tax on the second property will be included in the seller’s cost.

However, it will never happen that real estate increases forever in this cycle, because crises will certainly come and prevail.

However, there are still concerns that real estate taxation could have the effect of increasing house prices and further disadvantage people with limited budgets.

According to Mr. Ho Quoc Tuan, most models and studies show that the core factor affecting house prices is supply.

The tax effect could increase rather than decrease home prices as supply stands still.

According to expert Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, real estate tax is classified into land tax and house tax.

And this second type of real estate tax, he said, only exists in markets like Singapore – where there is real estate supply from projects that meet standards.

Regarding the goal of increasing budget revenue, Mr. Ho Quoc Tuan said that it is necessary to clarify that this policy is meant to improve state budget revenue, while its effectiveness in limiting speculation is unclear.

According to many experts, Ho Chi Minh City’s economic infrastructure has seriously degraded over the years, partly due to lack of funds for reinvestment.

`Real estate taxation can bring in revenue for local governments to reinvest in living space, and it is also reasonable for high-income earners to contribute more. But its effect can sometimes be

In addition, the way to proceed and when to levy taxes so that this policy achieves high consensus is also of concern.

Many experts are concerned about the city’s readiness to pilot the tax.

According to Mr. Chau, the pilot can be considered from 2025, after the real estate market stabilizes in terms of cash flow, legal liquidity… and the Ministry of Finance has issued the Law on Property Tax in 2024.

Mr. Chau believes that cases of owning a second house or more for the purpose of accumulating assets to make a profit should be taxed.

Therefore, it is necessary to tax on the basis of a combination of qualitative (purpose of use), valuation (value) and quantitative (quantity) of assets.

Regarding value, according to Mr. Chau, a second house should not be taxed if this property has a low value (for example, a house worth less than 2 billion VND is not taxed).

Another issue to note according to experts is that land use fees are not considered taxes, but in essence this revenue is no different from a tax tool.

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