The government cannot make concessions on vacant tax legislation

01 point of view

Written by: Review Editor Room

2020-07-03 16:00

The Legislative Council recently announced that it will end its consideration of the Rates (Amendment) Bill 2019, which means that legislation on vacant taxes on first-hand buildings must be renewed as soon as the Legislative Council changes. The government and the Legislative Council are certainly responsible for the "difficult delivery" of vacant taxes. However, whether the government will resubmit the draft in the next session, but the attitude is quite ambiguous, worrying people.

It’s a pity not to legislate

In June 2018, the Chief Executive, Lin Zhengyue, launched a six-stroke new house strategy (commonly known as the six-stroke strategy). In view of the number of first-hand private residential units that have been completed but not sold, from 4,000 in 2013 to approximately 9,000 in 2018, the Hong Kong government intends to require approved first-hand private residences with an occupation permit for 12 months or more The owner of the unit (mainly a developer) declares the unit's usage status every year and levies "extra rates" for units that have not been used for residential or rental purposes for more than 6 months in the past year. The amount is equivalent to the unit Twice the rateable value of the rate, or about 5% of the property price, to encourage first-hand private residential units to be launched as soon as possible.

Chief Executive Lin Zheng Yuee announced six new housing policy measures in June 2018, including the introduction of first-hand vacancy tax, that is, "extra rates" is levied on first-hand vacant units vacant for more than 1 year. (Profile picture/photo by Yu Junliang)

In the past two years, the relevant draft has still not been passed. The Legislative Council Committee on Rates (Amendment) Bill 2019 has even suspended the review because it was unable to complete the review this year. At the same time, according to the recent release of the Housing and Transportation Bureau, as of March 31 this year, the number of first-hand private residential vacancies has risen to more than 10,000, which shows that the situation of developers hoarding units has only increased. What's more, some real estate agency figures show that the vacancy rate of first-hand buildings has reached a level of more than 10,000 for five consecutive months at the end of April this year, which excludes the statement that the epidemic has hit first-hand building sales. Obviously, to release these valuable housing resources, stronger policy regulations are necessary.

It is true that the high property prices, that is, if the developer sells all the end-of-sale units as soon as possible, it may not significantly affect the property price, and there are a certain number of luxury homes that are not related to the general public. The price may not be sufficient. However, the focus of this legislation has always been not to regulate property prices, but to prevent developers from hoarding units and seeking profit at a good price, regardless of the actual amount of vacancies, the government has justified it. Moreover, vacant behavior is not regulated. In the long run, developers’ slow sales will only continue to stimulate property prices, and the consequences can only be borne by the public.

In addition, the Government has failed to legislate successfully, and the tax losses it loses cannot be ignored. According to statistics from local research institutes, from June 2018 to May 2019, at least 3,945 first-hand private residences were vacant for more than one year after obtaining an occupation permit, such as an average selling price of 10.9 million yuan (this is a group test 123 According to the calculation of a related residential case), the vacant tax that the government can collect is at least 2.16 billion yuan, which is equivalent to 11.1% of the Hong Kong government's tax revenue for 2020-21. It is no wonder that many real estate businessmen have opposed it. But this also proves that the vacancy tax is hot enough to help combat developer hoarding.

Deep-seated contradiction

The Hong Kong government has pointed out the issue of vacancy in first-hand buildings for two years, and is even more committed to vacancy tax legislation. However, after two years, the legislation has not progressed, and it has even ended in death. Dare to ask Lin Zheng's will to ask the people for their lives? We have pointed out many times that in the past, although the business of the Legislative Council was affected by social events, several important bills could be passed. Since the Government has always emphasized its commitment to the housing problem, why can it not try its best to lobby Members for support before the end of the session?

What's more, the government has no clear intention that it will quickly restart legislation in the next term of the Legislative Council. Instead, it has an ambiguous attitude, saying that it will consider resubmitting the draft to the Legislative Council for consideration in light of market conditions. Some commentators said that in order to gain the support of the business community, the government may not resubmit the draft vacancy tax in October to release goodwill.

What is "good for each other" is that Wheelock will launch its first new property after the National Security Law is passed. Among them, the real estate pricing is aggressive, not only becoming the most expensive new property in the district, but also more than 30% more expensive than second-hand housing estates in the same district. Such aggressiveness, Wheelock Real Estate Chairman Liang Zhijian believes that the National Security Law helps Hong Kong maintain prosperity and stability and naturally stabilize investor confidence. It is not understandable that developers expect society to return to "normal". It is precisely because property prices in the property market can continue to rise, and whether the citizens can live and work in peace and contentment is really not their consideration.

Of course, whether the government will "concess" developers to obtain political chips may be too early at this stage. However, since the National Security Law has helped society return to normal, developers are now selling new buildings at sky-high prices, which justly proves that the structural contradictions in Hong Kong are still serious. The Government should use the current opportunity to rectify the property market and carry out in-depth reforms. If the government chooses to use concessions to continue to attract developers who are vested interests, wouldn't it take Hong Kong to go back and continue to ask the public to endure real estate hegemony?

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01 depth

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