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.
Unpaid property taxes piling up in law firms a risk as Legco delays stamp duty bill, John Tsang claims
Finance chief says property levies piling up at law firms while lawmakers are filibustering
Law firms risk having to keep an increasing amount in property taxes paid by clients because of a delay in passing legislation to enact a doubling of stamp duty, the financial chief claims.
The extra stamp duty has been collected on transactions since February last year, but will not be paid to the government until it is enshrined in law.
In his weekly blog yesterday, John Tsang Chun-wah complained about filibustering and wrote that the delay in passing the measure had forced law firms to keep an "enormous amount" in unpaid stamp duty, most of it levied on purchases of non-residential properties.
"The legal sector has repeatedly expressed to us their worries about the risk of keeping the money," Tsang wrote, without elaborating on the nature of the risk. "If we are forced to resume debate on the second reading on Friday or even later due to filibustering or other reasons, there will be a bigger risk the bill will not be passed."
The Legislative Council's three-month summer recess begins on July 15.
Tsang said the delay in approving the doubling of stamp duty made it harder for the government to respond promptly to changing circumstances in the property market.
However, a senior conveyancing lawyer said the professional code of conduct required law firms to keep a separate account for their clients' money.
"Unless Mr Tsang believes the banks will close down, I don't see the risks he has raised," said the lawyer, who asked not be named.
Another solicitor, who also refused to be named, said it was "undesirable" for law firms to keep a large amount of unpaid tax as there was a risk "some black sheep" could misappropriate it.
Junius Ho Kwan-yiu, who runs a law firm, said the biggest pressure was to ensure clients' accounts were properly managed to avoid any delay in payment once the law was passed.
Ho estimated his law firm alone had about 1,500 conveyancing cases waiting for the settlement of unpaid double stamp duty.
His firm has had to hire extra staff to take care of the accounts to ensure it can meet the deadline for payment.
Democratic Party lawmaker James To Kun-sun accused Tsang of misleading the public, saying it was "normal procedure under the legislative framework to scrutinise the bill" and that did not amount to filibustering.
Meanwhile, a government source said plans to rebuild Queen Mary Hospital in Pok Fu Lam and Buddhist Hospital in Wong Tai Win would be delayed for at least a year because of filibustering in Legco.