Legco unlikely to pass lawmaker's stamp duty refund plan

PUBLISHED : Friday, 11 July, 2014, 3:55am
UPDATED : Friday, 11 July, 2014, 8:33am

A pan-democratic legislator's idea of refunding stamp duty to firms that hold on to properties for more three years is likely to fail in the Legislative Council, after the government secured rare support from radical lawmakers.

The policy would lower the business costs of companies with firm commitments in the city, as it would apply only to those that used the premises for their own operations, proponent Kenneth Leung said yesterday.

"I am cautiously optimistic," Leung said, after his amendment won overwhelming support from functional-constituency lawmakers, including prominent pan-democratic parties and the pro-establishment Liberal Party and the Business and Professionals Alliance for Hong Kong.

Leung is seeking to ease the impact of taxes that are at least double the original rates - a cooling measure imposed on buyers who own other properties or are not permanent residents. Legco is expected to vote on both the bill to double the stamp duty and his amendment by Tuesday.

But, after rounds of lobbying, the government is understood to have secured enough votes in the geographical constituencies - particularly lawmakers from People Power, the League of Social Democrats and the Labour Party - to block the amendment.

Under Legco's split voting system, an amendment must win a majority in both the geographical and functional constituencies to be approved.

"We fear Leung's amendment will lower the effectiveness of doubling stamp duty," Labour Party stalwart Lee Cheuk-yan said. "After all, we want to see a drop in property prices."

Real estate agents say the markets for offices and industrial space attract more buyers seeking properties for their own use.

Commercial property agency Midland IC&I chief Daniel Wong Hon-shing expects office sales to rise 20 to 30 per cent if buyers can reclaim stamp duty. Office sales have slumped to 408 transactions in the first half of the year, compared with 1,098 a year ago, the firm's data shows. But prices have climbed 4.5 per cent.

Another amendment, tabled by the Democratic Party's Wu Chi-wai to exempt non-permanent residents buying public rental flats from double stamp duty, is likely to pass.