New battle looms on property duty rises

Pan-democrats set to continue pressing their demand for the right to vet future increases, threatening passage of the double stamp duty

PUBLISHED : Monday, 24 February, 2014, 4:45am
UPDATED : Monday, 24 February, 2014, 4:44pm

Another battle over measures to cool the property market is looming, as pan-democrats keep fighting for the legislature to have a bigger say in any future tax revisions.

But the housing minister remains non-committal.

Legco passed the extended buyers' stamp duty on Saturday after a 35-hour debate.

Twenty-three pan-democrats walked out in protest at the government's refusal to make it mandatory for any change to win lawmakers' approval before implementation.

The new battleground involves the double stamp duty on properties worth more than HK$2 million for non-permanent residents and residents who already own a property. The tax ranges from 1.5 per cent to about 8 per cent, depending on the value of the property.

It took effect a year ago and the Legco Bills Committee is scrutinising the bill. The government must refund homebuyers if Legco votes it down.

The Labour Party insisted yesterday on requiring prior Legco approval - a process known as positive vetting. "Otherwise it will be very difficult for us to support the bill," Labour Party chairman Lee Cheuk-yan said. He said the party supported the measure in principle as a way to curb property speculation.

Democrat James To Kun-sun, who failed in a bid to amend the buyers' stamp duty bill to require such a vetting procedure last week, said his party would stick with the same proposal for the double stamp duty bill.

Alternatively, it would accept a suggestion made by commercial-sector lawmaker Martin Liao Cheung-kong.

Liao proposes that a new stamp duty could take effect after the financial secretary moved a resolution but that it would lapse if Legco did not approve it within six months.

Secretary for Transport and Housing Professor Anthony Cheung Bing-leung stopped short of making such a new commitment on double stamp duty.

A day after announcing that he would "seriously consider" changing the vetting procedure on any increase in the special buyers' stamp duty, he said the case of double stamp duty was another story.

"The two bills differ in nature and have different functions," Cheung said.

He said double stamp duty was based on the value of the property and covered residential and non-residential properties, and so involved not only housing issues.

He also said the pledge regarding adjustments to the buyers' stamp duty was "not just a verbal commitment", as some lawmakers claimed. While reiterating that he would consider making it a legal commitment, he would not give a timetable.

Under the negative vetting procedure, the government can implement a bill until legislators object to it.

This is in contrast with positive vetting, under which a bill can only take effect after lawmakers' approve it.

The latest controversy over vetting procedures could put more pressure on the government in its push for the double stamp duty bill, which has been criticised for failing to exempt non-profit organisations and companies buying offices for their own use.