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.
Developers want date for extra stamp duty to end
Developers want more exemptions and an end date to the additional stamp duty introduced by the government two months ago as a weapon against property speculation.
'We understand the introduction of extraordinary measures in usual times. But when the situation gets back to normal, the special stamp duty should be scrapped, and therefore we suggest putting a sunset clause in the bill,' Louis Loong, secretary general of the Real Estate Developers Association (Reda), said yesterday as legislators met interested parties about the new levy.
'For example, it should become ineffective after 12 months, or the Legislative Council should review such a policy after a period of time - this is very important,' Loong said.
In November, the government announced an additional stamp duty of between 5 per cent and 15 per cent on residential apartments resold within two years in a bid to curb speculation.
Loong said the policy hurt unintended targets, including some homeowners who needed to resell their flats because of economic difficulties.
The government should exempt these people from the additional levy, he said.
The Hong Kong Institute of Real Estate Administrators joined the criticism at the bills committee meeting. It suggested scrapping the stamp duty in two years.
But Deputy Secretary for Transport and Housing Annette Lee Lai-yee said it was impractical to add a sunset clause because the government could not forecast when the market situation would change, but could make adjustments when needed. She said too many exemptions and an appeal system would limit the effectiveness of the measure.
Separately, Reda ruled that the row involving William Kwok Tsz-wai, director of Cheung Kong (Holdings), who allegedly made misleading remarks about the new stamp duty, arose from differing interpretations by developers and the government of the definition of a preliminary sale and a purchase agreement.
The association said it was unable to resolve the issue and had reported this to the government.
The investigation came after Kwok posted comments on his blog in November urging buyers to be quick to speculate in apartments of the company's Tai Wai project, which he said were not affected by the new levy that was going into effect the next day.
However, the Transport and Housing Bureau said imposition of the extra duty would depend on when a formal sales and purchase agreement was signed and stamped. It then asked Reda to look into the issue.