Low income people also have to pay property tax?

Specifically, the draft proposes two options for the tax-free threshold for houses of 700 million VND or 1 billion VND, as well as two options for tax rates of 0.3% or 0.4%. However, the Ministry of Finance is inclined to propose a tax-free threshold of 700 million VND. Along with that, home owners will also have to pay 0.3 - 0.4% tax on the land they own. The land tax value is the price announced by the Provincial or City People's Committee at the time of tax calculation.

Tax on tax

The above calculation will lead to double tax. Because according to current regulations, each household will pay land tax annually at a tax rate of 0.03 - 0.15% depending on the area within the limit, or exceeding the limit, land in multi-storey houses, multi-household houses, apartment buildings... This means that if the Property Tax Law comes into effect, people will have to pay tax twice. In the case of abolishing land tax and applying the Property Tax Law, the tax that people have to pay will increase from 2 - 10 times compared to before.

Not to mention, to own real estate, people often have to accumulate income for a long time. This income is after-tax income after individuals have paid personal income tax. When building a house, they have to pay value added tax when buying construction materials, house completion fees, drawing fees... When selling real estate, people will have to fulfill their obligation to pay money to the state budget such as land use rights transfer fees, 2% personal income tax on the selling price... If property tax is added, these taxes will overlap.

Currently, many apartments for low-income people in big cities have prices of more than 700 million VND.

Another reality is that most people who buy real estate, especially young people, often use bank loans to pay in monthly installments. The application of property tax will cause the demand for real estate purchases and real estate loans to slow down.

Millions of people pay property taxes

Disagreeing with the draft Law on Property Tax, lawyer Nguyen Duy Hung, Director of ITPC Law Firm, commented: “I feel that the proposed regulations are highly emotional without considering the current reality that people are subject to too many taxes. Assets such as land, houses, cars, yachts have already paid land tax, VAT, personal income tax when bought and sold... forcing them to pay additional property tax is a tax on top of tax. For people, real estate is a legal asset, which must be accumulated for a long time to have, now having to pay property tax makes them unhappy.”

Mr. Hung believes that real estate is often of great value, so applying tax to this sector will increase revenue quickly. Looking at it, we can see that this tax is aimed at increasing budget revenue more to create fairness because almost all people, especially in big cities, most people will pay this tax because the tax threshold is too low. In Hanoi, Ho Chi Minh City..., many houses with a value of over 700 million VND have to pay tax, while cars, yachts... over 1.5 billion VND are subject to tax. I do not understand the basis for these levels.

Mr. Hung raised the issue and analyzed: “The drafting committee gave the argument according to international practice. Internationally, some countries do it, some do not, so why not follow the example of countries that do not apply this tax? Countries that apply property tax, whether they collect other taxes like Vietnam or not also need to clarify. Every year, the financial authorities research to apply a new tax or increase old taxes, which will make people confused and cause a lot of anger.”

Lawyer Truong Thanh Duc said that many countries apply property tax but their social security is high, if Vietnam wants to apply it, it must review it to make it reasonable, suitable for the development conditions as well as the income of the people. Property tax is often levied on rich people, on houses, cars, yachts... with large values ​​of tens or hundreds of billions of VND. As for the draft regulation Vietnam proposed at 700 million VND, or 1 billion VND, low-income people will also have to pay.

“A few years ago, the agencies implemented a VND30,000 billion credit package to support housing for low-income people to buy houses worth less than VND1.05 billion. So what criteria did the drafting committee use to determine that houses worth over VND700 million must pay property tax?”, Mr. Duc asked.