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.
Lawmakers warn of stand against stamp duty move
Complaints from business are being heard in Legco, with some members saying they will vote down the bill if no concessions are made
Lawmakers have warned the government that they will vote against a proposal to double stamp duty on property purchases if the administration fails to make substantial changes.
Legislative councillors issued the threat after trade groups, professional and religious organisations condemned the planned bill for not making a distinction between long-term genuine investors and speculators.
Hit by a slump in property sales after the introduction of the doubling of stamp duty in February, hundreds of property agents protested outside the Legislative Council building and urged the government retreat on the "unreasonable measures".
"About 10 per cent to 20 per cent of agency firms will close down in six months as sales volumes have plunged to a level close to during Sars in 2003. If the situation persists, it will not be surprising to see more than 10,000 agents lose their jobs and more closures," said Tony Kwok Tak-leung, chairman of the Property Agencies Association.
Among the 28 deputations voicing their opposition at the Legislative Council's Bill Committee on Stamp Duty (Amendment) Bill 2013 yesterday, chambers of commerce representing thousands of foreign firms in Hong Kong criticised the extra stamp duty as wrongly targeted at companies buying offices for their own use. They said it would severely damage Hong Kong's free market economy.
Most organisations suggested the government not penalise long-term investors who buy premises for their own use and should extend the window for exemption for owners to upgrade to bigger flats from the current provision of six months to as long as 24 months. The Hong Kong Christian Council called for an exemption for charity and religious groups which also need to buy premises for their own use.
The Liberal Party's James Tien Pei-chun and Starry Lee Wai-king of the pro-government Democratic Alliance for the Betterment and Progress of Hong Kong indicated both parties would vote against the bill if the government refused to address the concerns.
"We will not support the bill if the government fails to exempt the extra duty for corporate buyers on purchases of residential and non-residential properties coupled with imposing a sunset clause to end the measure in one to two years," Tien said.
He cited the case of Canadian insurer Manulife (International), which faces a extra payable stamp duty of HK$191 million as it bought an office building for HK$4.5 billion for its own use shortly after the doubling of stamp duty took effect. "We don't see the new tax has achieved its purpose of lowering property prices. Therefore, we will not support the bill," he said.
Lee, who is also the chairman of the Bill Committee, said the administration should consider the views of those businesses hurt by the move.
If the bill is passed, double the existing stamp duty on property sales exceeding HK$2 million will be charged on transactions starting from February 23, the day after the anti-speculation measure was announced
Chief Executive Leung Chun-ying, on a visit to New York, told Bloomberg that the government would not ease its property curbs until there was a steady supply of new properties.