||Tax cuts are the best way to prosper real estate industry. Since the implementation of Land Value Increment Tax 50% Cut on Jan 7, 2002, the number of new-constructed houses in Kaohsiung downtown area had increased 2.1 times than previous year in 2003. In addition, since the execution of reduction of Estate and Gift Tax on Jan 21, 2009, the number of new-constructed houses in Kaohsiung downtown area had increased 1.6 times than previous year in 2011 as well.|
The leader handling tax reform must have the predictive ability, and make the right decisions at correct timings. Because Taiwan is categorized as a small open economy, it’s easier for our skilled people and funds to circulate among the whole international market. Therefore, it’s unwise of us to keep high tax rate. The Income Tax and Business Tax must be lowered so as to be closer to neighboring countries. Furthermore, Real Estate Tax and Opportunity Tax must be decoupled with international markets. Local governments in Taiwan have better revise tax regulations much thoughtfully first, and then charge Land Value Increment Tax, Land Tax, and Housing Tax directly based on the final prices or even present prices, and then use the tax incomes in local constructions more fairly and efficiently.
Modifying tax regulations according to Taipei City’s local problems and extending all of them to all cities in Taiwan is not appropriate. Some of the key reasons are as follows,
1. Land and housing prices in Taipei are five times as high as those in Kaohsiung.
2. Housing loans and the ratio of house price to income in Taipei are 1.85 times as high as those in Kaohsiung.
3. The prices for luxury houses are considered as over 70 million dollars in Taipei, whereas over 40 million dollars in Kaohsiung.
4. Most government agencies and large companies are located in Taipei city. The population of Taipei is around 300 million and Kaohsiung keeps a little bit smaller number, 270 million. However, most tax incomes as well as constructions are distributed to Taipei, but most factories and a variety of derived pollutions are left in Kaohsiung.
Furthermore, the current tax regulation, which merges Land Income Tax and House Income Tax into Operating Income Tax and Individual Income Tax, is not reasonable. Through my study, I hope to provide some suggestions as follows to improve the soundness and completeness for the subsequent tax regulation revisions in Taiwan,
1. The goal of revising tax regulations is to simplify the whole process. When real estimate ownership is transferred, Land Increment Tax has better be charged directly and just for one time.
2. Taxes of keeping lands and houses are better charged based on final price or present price.
3. Withdraw the implementation of Integrated Housing and Land Tax.