Proposing a series of tax solutions to eliminate land fever

Mr. Le Hoang Chau, Chairman of HoREA, said that tax-related tools, high taxation are the best solution to treat land fever.
Ho Chi Minh City Real Estate Association (HoREA) has just sent a document to Prime Minister Pham Minh Chinh, proposing special solutions to treat land fever and house price fever.

Development is not sustainable The document states that in the past 15 years, the real estate market has grown rapidly but has not yet achieved the transparent, healthy, stable and sustainable development goals. The market still repeats many land fevers, especially the land fever that occurs consecutively on a large scale today, causing many negative consequences, losing opportunities to create housing for many income earners. On average, urban low-income people, labor workers and migrants, affect social security and order. Land fever in the area of ​​Phan Thiet airport in early March 2021. Photo: Hop Pho The main culprits of the land fever, house price fever, land price fever are the “head of the family, land storks, and dishonest businesses” who perform tricks to spread rumors, make prices – blow prices, take advantage ” crowd psychology – greedy “,” prey “on fake purchases and excess opportunities to” chisel the fat “, illegal profit and in some cases there was connection, support, “back against” of grassroots cadres. When the land fever subsided, many individual investors “surf” with the crowd due to lack of capital to borrow with high interest rates, not having enough information and skills, so they were trapped and lost heavily. even fell into the situation of accumulating debt. Many land plots became deserted, while land prices in some localities were pushed too high compared to their real value, negatively affecting the investment environment, making it difficult to attract investors, especially big investors. In addition to land fever, there is a situation of skyrocketing house prices, mainly due to a sharp decline in the supply of housing projects, a lack of housing products, especially a lack of affordable apartments. or low-cost commercial housing, social housing. The shortage of supply due to unapproved housing projects, congestion in construction investment procedures, and general intangibility have created advantages for some businesses that already have existing projects and have home products. In overwhelming the market “imposes” the selling price to get a very high profit. Tax against speculation Through the research, Mr. Le Hoang Chau, President of HoREA, proposed to the Prime Minister to consider solutions to “treat” land fever and stabilize house prices through the effective use of tax tools and the issuance of unjust tax. movables. Specifically, HoREA proposes to issue tax against speculation on housing and land; Income tax is imposed at a very high tax rate for the sale or transfer of houses and land right after establishment to eliminate the speculation of investors in case the market shows signs of speculation or fever. hot “bubbles”. “I hope the Prime Minister will consider and set a very high tax rate if selling or transferring houses and land in the first year and keep high tax rates in the second and third years. Cases of sale and transfer of houses, After being created for 3 years or proving that the need to sell or transfer houses or land is justified, the normal tax rate will be applied.As such, this tax will not affect home buyers. there is a need to create real houses “- stated by HoREA’s document. HoREA also recommends taxing people who own multiple properties that are subject to a progressive tax rate depending on the number of properties owned. In case the real estate market is speculated, very high tax rates can be applied to eliminate the will to speculate. The delay in putting land into use should also be high taxed to eliminate the will to “hold on to” the land, slow to put the land into use and to combat land speculation. Real estate tax In particular, the Association proposed to issue a “real estate tax”. Because at present, homeowners do not have to pay housing property tax, but only have to pay “non-agricultural land use tax”, including “residential land” at the rate of “residential land” in the term. the rate is 0.03% of the land price list, so the tax payment rate is very low, almost negligible. The association agreed with the Ministry of Finance’s proposal to consider issuing a “real estate tax” on the value of houses and land, to create a stable and sustainable source of revenue for the state budget. But the Association recommends carefully considering, to ensure that it is consistent with the common income of the majority of individuals and households who have middle income and low income in our country. However, in order not to have the “tax-stack tax” situation, it is necessary to replace the current “land use levy” collection method, which is a burden for home buyers in housing projects. Horea proposes to add the efficient use of monetary and credit tools of the State Bank. In addition, it is proposed to use measures to reduce the proportion of real estate loans to buy credit for “surfing” investment, as well as to strictly control “consumer credit”, to prevent the transfer of a part of sources. loans to build a house, repair a house, buy a house, to “surf” when the real estate market has a “bubble” fever. Tight control of “dirty money” In addition, HoREA proposes to strictly control the source of “dirty money” to buy real estate for “money laundering”. According to Mr. Chau, in the first 3 months of 2021, real estate credit growth of 3%, although higher than the overall credit growth of only 2.93%, but not too unusual. Thus, a big question is that the huge investment capital that makes the real estate market hot “bubble” now come from?