Property Tax: It is necessary to determine which property is at the taxable level

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Developing the Law on Property Tax to be reasonable and fair. Photo: Nguyen Hien.

At the online talk on the draft of the Law on Property Tax, which the Ministry of Finance recently announced comments on 17 April 2018, the Vice Chairman and Secretary General of the Association of Real Estate Brokers, Mr. Nguyen Van Dinh said that land was a public resource, so the exploitation of that resource through land tax was completely reasonable. However, according to Mr. Dinh, the key issue of taxation is determining which assets are at the taxable level. It is important to design policies and how to manage them.

"Currently, in the segment of social housing, with the price of VND 15 million per m² per unit and the minimum area for living is 50 m² one apartment costs about VND 750 million. So most social houses are subject to property tax.

Housing is the minimum need for users who are struggling financially and the State is facilitating people through many policies. If the Ministry of Finance applies a tax rate at a price of VND 700 million, it should consider whether it is appropriate, especially for taxpayers", Mr. Dinh said.

Economic expert Dinh Tuan Minh also said that this threshold had many unreasonable points. At present, the State has many preferential policies for buyers of social housing and low income people, especially with the social housing which is currently enjoying State land tax exemption. These cases are subject to property taxes, which leads to conflicts in policies.

"We need to recalculate the taxable threshold. Consider whether there is a progressive rate of tax or not. With high value apartments for high income people, the State can regulate the tax. But with low income people, the State should reconsider the threshold so that these objects are not subject to tax", Mr. Minh suggested.

Commenting on the draft Law, Mr. Nguyen Van Dinh also proposed, we should let the local Government set the tax rates accordingly. "In fact, urban living standards are quite different from the countryside. If the tax rate starts from the level of VND 700-800 million, most people in large cities are subject to tax. This will make the question of whether the tax is fair or not".

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According to Mr. Dinh, many countries have transferred the collection of property taxes to local people for the purpose of living, using the right purpose: parks, kindergartens, and schools. The fee is due to the demand in that area. The collection should be associated with spending. Thus, putting a formula calculated on the investment rate is not appropriate. The purpose of the property to spend on living should only be collected at the specific needs of each place.