Critics doubt luxury tax will help to narrow wealth gap in Taiwan

With the year-end legislative election and a presidential election next March, the Taiwanese government is pushing a controversial bill that would tax housing transactions and the purchase of private jets and other luxury items.

A so-called luxury tax bill aims to contain skyrocketing property prices and reduce a widening income gap.

Under the bill, already approved by the cabinet and expected to be rubber-stamped by the Kuomintang-dominated legislature before it would take effect on July 1, those who sell homes not used personally or investment properties owned for less than two years would be subject to a tax of up to 15 per cent of sale price.

Also, a 10 per cent special tax would apply to sales of cars, personal jets and yachts priced at over NT$3 million (HK$791,000), as well as furniture, furs, coral, ivory, tortoise shell and other products of protected species worth more than NT$500,000. If the products are manufactured by Taiwanese companies, the tax will be imposed on the companies, and if the products are imported, the importer will have to pay.

The 10 per cent tax would also apply to sellers of club memberships priced at more than NT$500,000, including golf club memberships.

'We hope the introduction of such a tax can help cool the overheated market and narrow the widening wealth gap,' Premier Wu Den-yih said at a cabinet meeting last week to review the bill. Wu stressed the tax was consistent with the ability-to-pay principle and would not affect ordinary citizens.