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Budget | The idea of ​​a progressive rate system is desirable to take into account the influence of tenants

2021-02-25T09:38:52.317Z


When Financial Secretary Chen Maobo announced the 2021/22 Budget, he proposed to study the introduction of a progressive rates system and provide constant concessions for self-occupied properties. If the measures are implemented properly, they will have the effect of collecting property value-added tax.


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Written by: Commentary Editing Room

2021-02-25 17:25

The last update date: 2021-02-25 17:25

When Financial Secretary Chen Maobo announced the 2021/22 Budget, he proposed to study the introduction of a progressive rates system and provide constant concessions for self-occupied properties.

If the measures are implemented properly, they will be able to collect property value-added tax and curb speculation.

However, landlords may also pass on the new rates to tenants, and the government must formulate relevant measures to reduce the impact.

Chen Maobo pointed out that although the rates system has been implemented for many years, it is simple but not as accurate. Therefore, it is studied whether it can be improved, such as introducing a progressive system.

Although his response to the progressive goal is directly related to the fight against property speculation, he also pointed out that the owner-occupier rate has the opportunity to be exempted from the levy rate, that is, for those who hold more than one property.

Regarding the classification of the salaries tax rate, the rateable value can be referred to. The higher the rent value, the tax rate can also increase.

As the owner’s benefit from non-owner-occupied properties has decreased, it is reasonable to say that the new measures are aimed at speculators.

When Financial Secretary Chen Maobo announced the 2021/22 Budget, he proposed to study the introduction of a progressive rate system.

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To combat speculation while protecting tenants

Those who oppose the progressive system of rates cited two more reasons. One is that it is a recession and the timing is not ripe; the other is that landlords will pass on the additional rates to tenants, which will increase the burden on tenants.

It is true that the market is not good, and many people even think that Chen Maobo is overly optimistic about the future economic forecast. However, Hong Kong people have witnessed that the property market is still strong under the epidemic, and property prices and rents are unlikely to drop.

Furthermore, regardless of whether the property price is high or low, the rent and tax of the property should follow the fair principle of paying more for those who can afford it, and the progressive rate system should be implemented at all times.

It is roughly estimated that in the first quarter of 2020, there are about 355,000 private housing tenants in Hong Kong, accounting for about 13% of the total number of households in Hong Kong. Even if the government will amend the law in the future to require the landlord to pay the rates, the landlord can still conceal when determining the rent. Land includes rates, and the government cannot completely prevent landlords from passing on rates to tenants.

Nevertheless, the government can formulate supporting measures to mitigate the impact.

First of all, the government will not increase the rates collection rate for residential units with lower rates.

The low-rent units are small in size or located far from the urban area, and most of them are rented by the grassroots or small families.

Even if the collection rate is increased by two or three percentage points, the increase in rates will be split between the landlord and the tenant, and the actual rates paid by the tenant will increase by several hundred to one thousand dollars each quarter, which is by no means a small amount.

On the contrary, maintaining the levy rate can relieve tenants’ concerns.

Chen Maobo pointed out that although the rates system has been implemented for many years, although it is simple but not as accurate, the study can be improved, (data picture)

It should be equipped with rent increase restrictions and vacancy tax

Furthermore, the government may consider limiting the scope of rent increases.

The government intends to establish rent controls for subdivided housing rentals, one of which is to restrict rent increases.

If the authorities extend the measure to private residences where the rateable value is low and the entire unit is rented out, even if the landlord increases the rent in the future to make up for the overpaid rates, at least the increase can be restricted so that the tenants will not have to bear all .

In the long run, the government must implement a deterrent vacancy tax for second-hand residential properties, and encourage landlords to rent out vacant units as soon as possible, while tenants have more room for bargaining and strive for affordable rents.

As the name implies, the rates valuation is evaluated. The owners and the Evaluation Department may have differences in the results, and the owners can object and appeal.

At the end of 2019, the Evaluation Department received about 4,100 residential objection applications, of which 140 were successful, with an average rent reduction of 9.9%.

Once the progressive rates system is implemented, landlords will definitely tighten their rates, and objections and appeals are bound to rise.

In this regard, the department must prepare manpower to handle the case.

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Source: hk1

All news articles on 2021-02-25

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