The HCMC Government has proposed the Ministry of Construction increase the property tax on owners of the second home and land lot that change hands within a year, an apparent move which is aimed at warding off real estate speculation.

HCMC will hike tax on houses and land lots that change hands within a short time to discourage property speculation

According to the office of the HCMC People’s Committee, the city government also wants to collect a higher tax from properties that benefit from State-funded infrastructure development to ensure the fairness among local people.

As for housing policies, HCMC suggested the Ministry of Construction efficiently allocate the budget so that the State Bank of Vietnam can implement social housing policies in accordance with the 2014 Housing Law.

Social housing is sold at concessional prices owing to partial subsidy by the State to support policy beneficiaries.

The city government also wants the ministry to ask the Vietnam Bank for Social Policies to offer preferential loans as stated in Article 13 of Decree100/2015/ND-CP to raise more capital for social housing programs.

In its proposal, the city government calls for building a legal system to pilot home savings funds and real estate credit funds to diversify investment sources in the property market.

Previously, the proposal of taxing the owners of the second home has been opposed by local people and enterprises. However, the tax may be applied in the future, said a representative of the Ministry of Finance.

City annually earns VND8 trillion from real estate

In a related development, the property sector in HCMC annually contributes nearly VND8 trillion (US$352.5 million) to the city’s budget, according to a report sent to the Ministry of Construction by the city government last week.

The contribution of real estate projects to the city’s budget ranged from 3% to 8% over the past years. However, the city can increase revenue from the real estate sector by developing a more transparent business environment to ensure proper and sufficient tax collection.

In 2006, HCMC construction and property sector’s gross domestic product (GDP) reached VND22.67 trillion, and the figure surged to VND88 trillion in 2015, accounting for 9.2% of the city’s total GDP.

The report also showed that the sector generated more than VND100 trillion for the State coffer in the 2006-2015 period.

In its report, the city government also noted that there are currently 29 large housing projects being executed with a total investment of VND158 trillion.

SGT