Low income people also have to pay property tax?
With the plan that houses over 700 million VND must pay property tax, many experts believe that the Ministry of Finance has "included" low-income people in the taxable category.
Specifically, the draft proposes two options for the tax-free threshold for houses of VND700 million or VND1 billion, 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 VND700 million. Along with that, home owners will also have to pay a tax of 0.3 - 0.4% on the land they own. The land tax value is the price announced by the People's Committee of the province or city 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 when 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.
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| 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 monthly installments. Applying property tax will cause the demand for real estate purchases and loans to buy real estate to slow down.
Millions 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 buying and selling... 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 said 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 aims to increase 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 setting 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 don’t, so why not follow the example of countries that don’t 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 confuse people and cause a lot of frustration.”
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 the rich, on houses, cars, yachts... with large values of tens, 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 put forward for houses worth over VND700 million to pay property tax?”, Mr. Duc asked.
