Taipei, March 10 (CNA) The luxury tax that was launched in 2011 in a bid to stem skyrocketing housing prices in Taipei and neighboring New Taipei has been successful in achieving the aim, Finance Minister Chang Sheng-ford said Monday.
The evidence can be seen in that closing prices for so-called "fake luxury houses" in the two municipalities has been cut to 60-70 percent of the asking prices, Chang said at a hearing at the Legislative Yuan's Finance Committee.
In addition, he went on, average housing prices in Taipei and New Taipei have been maintained at a level that is almost unchanged. "There has only been slight growth," he said.
This, he said, shows that the luxury tax, known formally as the Specially Selected Goods and Services Tax, has worked since its introduction two-and-a-half years ago, Chang said.
The Legislature should not abolish the tax but should merely trim it a little, Chang said at the hearing, during which lawmakers reviewed draft amendments to the Specially Selected Goods and Services Tax Act.
The amendments include having the act cover land in non-urban industrial districts and expanding the exemption articles to cover house owners who buy a new house to replace the one in which they currently reside.
"Fake luxury houses" are defined as expensive housing units that are situated in non-upscale districts or in places with poor landscape, according to Chang.
Under the luxury tax act that took effect June 1, 2011, expensive items such as private aircraft, yachts and automobiles worth over NT$3 million (US$99,000), as well as golf club memberships worth over NT$500,000, are subject to the 10 percent luxury tax.
In addition, non-owner-occupied residential properties are subject to a 15 percent luxury tax if they change hands within one year of being purchased, or 10 percent if they change hands within two years.
In contrast to Chang's remarks, however, Sinyi Realty statistics show that housing prices in Taipei and New Taipei recorded an annual growth of 12-14 percent in 2013.
The average price of buildings in Taipei rose to NT$686,000 per ping (one ping is equivalent to 3.3 square meters) in 2013, up around 12 percent from the previous year, while in New Taipei, it increased to NT$345,000 per ping, up some 14 percent, said Sinyi Realty, one of the country's major real estate brokerage companies.
(By Stacy Wu and Elizabeth Hsu) ENDITEM/J