Hong Kong stamp duty
To rein in the city's runaway housing prices, Hong Kong's Financial Secretary John Tsang Chun-wah announced an additional 15 per cent stamp duty on non-permanent-resident and corporate buyers starting from October 27, 2012. The move prompted speculation over the effectiveness of taxation on the real estate market and criticisms that Hong Kong was turning away from its roots as a free market economy in favour of a more protectionist market environment.
Tsang says may be room to cut stamp duty on certain properties
Chief Executive Donald Tsang Yam-kuen says there may be room to cut stamp duty on certain properties. But market watchers fear such a move would increase speculation.
'I do take the point that for certain classes of properties, speculation is less significant and there might be some room [to cut stamp duty], but this is a matter for the financial secretary to consider,' Tsang said on an RTHK radio programme yesterday.
He was responding to a listener's suggestion to waive stamp duty on properties valued below HK$6 million for permanent residents. The listener said he and his wife had saved for a long time for a new home and the stamp duty had amounted to several months' worth of their savings.
'It's a sensitive issue,' Tsang said. '[Stamp duty] is one of the instruments we have to use to stop excessive speculation in the market and we have to do it very carefully if we want to relax certain things.'
Asked if the government should distinguish different flat buyers by their residency, Tsang said the issue needed to be handled carefully because such a distinction would lead to a 'much bigger philosophical issue' and Hong Kong was a free place. Currently, the stamp duty on property transactions valued below HK$2 million is HK$100. The rate is progressive and is increased to 3 per cent of the transaction price for flats worth between HK$2 million and HK$6 million and 4.25 per cent for those costing more than HK$20 million.
Patrick Chow Moon-kit, head of research at Ricacorp Properties, said cutting or waiving stamp duty meant lowering the cost of speculative activities, thus wooing more investors into the red-hot property market.
He said after the property market slump in 2003, the government lowered the stamp duty on properties valued between HK$1 million and HK$2 million from 1.5 per cent to HK$100. The number of transactions on such properties then rose by up to 40 per cent in a year, about 10 percentage points more than for other, more expensive flats.
'Instead, I think the stamp duty for cheaper flats should be increased to curb speculation,' Chow said.
Terence Chong Tai-leung, associate professor of economics at Chinese University, said waiving stamp duty on certain properties would affect government revenues. He said cutting the rate would boost transactions and flat prices, but a small cut could ease the burden for a middle class family buying a home.
In another radio programme, housing minister Eva Cheng said flats under the new 'rent-and-buy' scheme, My Home Purchase Plan, which was announced in Wednesday's policy address, would be sold at discounted prices after being rented out for a few years.
She said the first 1,000 flats available at the Tsing Yi site in 2014 should be rented out at about HK$8,000 to HK$10,000 a month.
Meanwhile, the Housing Authority will step up action to ensure public rental flats are not under-occupied, with priority on 3,000 cases identified as serious over two years.