15 per cent 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.
Legco set to vote for year-old stamp duty rise
Government's word looks like it will be enough regarding negative vetting of future measures
Additional stamp duties introduced to cool the property market look set to become law tomorrow - more than a year after they took effect - after a concession by the government last week won more support from legislators.
At least 42 of the 70 lawmakers say they will support the government's Stamp Duty (Amendment) Bill when it is put to a Legislative Council vote.
But some are calling for the vote to be postponed until a promise by Secretary for Transport and Housing Professor Anthony Cheung Bing-leung to amend the mechanism for adjusting the duty levels has been written into the law.
"It is a procedural injustice. The government should include the latest changes in the bill, and not destroy the legislative mechanism by simply making a verbal promise," Professional Commons lawmaker Kenneth Leung Kai-cheong said.
Under the change, announced by Cheung on Friday, the government would have to table a new bill for any proposed increase in the 15 per cent buyers stamp duty and the anti-speculation special stamp duty.
Decreases would remain subject to a negative-vetting system, under which they could be introduced and remain in effect unless amended by lawmakers.
Government officials are expected to explain the change at an urgent meeting of the Legco bills committee today.
Cheung said yesterday that the pledge was not his decision but came "from the top".
"It's not unprecedented," he added. "The government also tabled a bill on motor vehicles' first registration tax in 2011 instead of choosing to do it through the negative-vetting process."
But Cheung admitted the pledge was a compromise between legislators' demands and what the government thought should be done.
"Negative vetting should be used to handle measures that are market-sensitive and time-critical so as to avoid creating uncertainties in the market," he said.
Lawmakers had tried to limit officials' power to scrap, increase or reduce the duties.
Democratic Party lawmaker James To Kun-sun, who had proposed that the government be required to seek Legco permission before making any changes to the stamp duty levels, called the latest move "administrative hegemony".
"The government has made a fundamental policy change which was never discussed by Legco's bills committee - and just a few days before the Legco readings of the bill," To said.
"What are the grounds for the change? What is the legality of making the policy change through a policy commitment?" he asked.
Under the bill, foreign and corporate buyers of property must pay an extra 15 per cent tax on top of the existing stamp duty, while a special stamp duty is levied on the resale of properties within three years of purchase, up from the original two years.