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Hong Kong housing

Hong Kong’s vacancy tax on flats must not apply to newly built projects

PUBLISHED : Sunday, 15 July, 2018, 4:00pm
UPDATED : Sunday, 15 July, 2018, 4:00pm

I am concerned that the Hong Kong government will apply the vacancy tax on newly completed flats retrospectively (“What’s behind Hong Kong’s push for a vacancy tax on homes – and will it really work?”, June 28). If this is done, the government will effectively be changing the rules after the game has started, and Hong Kong’s reputation as a good place to do business will sink lamentably.

By all means introduce the tax, but on new land sales/conversions only.

The government must also expect that the bidding for land and conversion premiums to be somewhat lower after the flexibility of leaving a newly completed flat vacant is removed.

But then, who is the main beneficiary of high property prices? The purchase price of a newly built flat is absorbed by three items: direct and indirect construction cost, developer’s profit, and the balance – possibly around 70 per cent – which goes to the government, that is, the people of Hong Kong.

Unless the government is prepared to forgo a very large part of the income it receives from land sales/conversions and related stamp duty, property prices in Hong Kong must remain high.

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The loss of this income may need to be replaced by a goods and services tax, a tax that was found to be unpalatable to the public when it was first discussed some years ago.

One gets the impression that when it comes to property prices, the Hong Kong public would like to have its cake and eat it too.

P.K. Lee, Tung Chung