New house tax to fund infrastructure

Friday, Jan 03, 2014 12:51

HA NOI (Biz Hub)— The Viet Nam Federation of Civil Engineering Associations proposed imposing two new taxes  property tax and development charge on personal houses starting next year in order to procure funds for infrastructure investment.

Pham Sy Liem, vice chairman of the federation, said that the property tax would take into account the value of both land and housing, replacing the old one, which considers only land value.

The tax would be imposed on houses in urban areas as well as those near crowded routes with green trees and public lighting systems.

"Houses located in convenient places will be more valuable and expensive, so they must be subject to higher fees," he said, adding that the tax would be used for infrastructure development.

According to Liem, the Ministry of Finance once proposed a law on land and housing taxes, but did not get approval from the Government due to the financial crisis.

However, it was necessary to collect the tax to have a stable fund for development, he said, adding that many nations in the world collected this kind of tax.

In terms of development charge, Liem said the fee would only apply to newly-built or rebuilt houses.

For example, a newly-built house would be VND5 million (US$240) more expensive if a new road were built next to it, so the owner would have to pay a fee in accordance with this fact.

He added that the Ha Noi People's Committee had collected the same fee of 10 per cent of the value of a newly-built house, but it was stopped after two years of implementation.

Dang Hung Vo, former deputy minister of Natural Resources and Environment, agreed with the initiative, saying many ASEAN countries imposed taxes amounting to 1-1.5 per cent of the market price of land and housing. The current land tax in Viet Nam was only 0.03 per cent.

However, Vo admitted that because the income of people was rather low, any tax increase should be carefully considered.

Le Dang Doanh, an economic expert, said officials should collect feedback from the public before implementing the development charge. He cited Switzerland, where the Government collected public opinion on tax amounts, as a role model.

Nguyen Hong Van, a resident of An Duong Street, said she already had to pay more than VND1.2 million ($57) each year in land fees and did not want to pay more.

"I'm tired of all kinds of fees. I think the authorities should consider the financial burden people are suffering," she said.

The federation will submit the plan to authorised agencies for approval early next year. — VNS

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