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.
Mass rally planned against controversial property market cooling measures
Lawmaker urges government to drop loophole that would see flat buyers not having to pay higher duty if purchase is in name of offspring
Fanny W. Y. Fung and Ng Kang-chung
A lawmaker has urged the government to drop a loophole that allows property buyers to avoid higher stamp duty by buying flats in their children's name.
The bill exempted first-time buyers under 18 from the double stamp duty, a provision their parents or guardians could abuse, Democratic Party legislator James To Kun-sun said.
"An adult can make use of this exemption as a loophole," To said. "Why does the government not eliminate this exemption, as it did [when it was included in] the bill on buyers' stamp duty?"
Mainlanders with Hong Kong-born children can also enlist the exemption.
To urged the government to plug the loophole and a few others before the law was passed.
To was speaking at a Legislative Council bills committee meeting to scrutinise the Stamp Duty (Amendment) Bill 2013. The tax took effect a year ago as an initiative to cool the market.
Since February 23 last year, buyers of properties worth more than HK$2 million incur stamp duty at rates at least double those before that date unless they are permanent residents buying their first home.
The new rate ranges from 1.5 per cent to 8.5 per cent, depending on the cost of the property.
The old rate was between HK$100 and 4.25 per cent.
Non-locals as well as companies must pay the new rate, plus a buyers' stamp duty of 15 per cent.
Mable Chan, deputy secretary for financial services and the treasury, did not consider the exemption a loophole, although she acknowledged it could allow parents to take advantage.
"I understand the concern," Chan said. "But [if the buyers are not locals] they already have to pay the buyers' stamp duty, so we do not want to further penalise them."
The buyers' stamp duty came into force on Saturday, along with a special stamp duty of 10 to 20 per cent on quick resales. Lawmakers are now moving on to the double stamp duty bill.
Both bills fall under a system of "negative vetting", which allows the government to levy a tax before receiving approval.
Pro-establishment parties support the government's increase of stamp duty as a tool to cool real estate prices, while pro-business lawmakers object to it as market interference.
Outside the Legco building, about 300 property consultants, surveyors, site workers and others in the industry staged a protest against the new taxes.
The buyers' stamp duty "is not the end of the story. There is still another bill about market-cooling measures being examined by lawmakers," said Raymond Ho Man-kit, spokesman for the group, which called itself the Alliance of Victims of Government's Harsh Measures.
"We are not against anti-speculation. But the measures are so harsh that layman investors are also affected."
The alliance said it had collected about 150,000 signatures on a petition that it had handed to the government.
The alliance warned that more than a third of estate agents could be thrown out of work if the government refused to scrap its market-cooling measures. Estate Agents Authority data shows the number of estate agents has fallen for nine consecutive months.
The city had 35,645 agents last month, down from 37,173 in April.