National Assembly concerns about plans to apply property tax on a pilot basis in Hochiminh City

By Ngoc Hai - Nov 25, 2017 | 11:24 AM GMT+7

TheLEADERNearly all National Assembly members agreed to apply new regulations for Hochiminh City (HCMC) on a pilot basis, but doubts remain over property taxation.

National Assembly concerns about plans to apply property tax on a pilot basis in Hochiminh City
Economic growth of HCMC affects the growth of the whole country

A new resolution on the pilot policies for development of HCMC, which is being discussed by the National Assembly, mainly covers the decentralization of land management, investment and financial management.

The new resolution will give the city autonomy to change the use/zoning of land areas larger than ten hectares or to enjoy a half of the sale of state property.

Almost all members of the National Assembly agreed on these measures in order to promote development, but they still wondered about the mechanism of property taxation.

In many countries around the world, property tax revenue plays an important role and acounts for a large share of total tax revenue. However, in Vietnam, the revenue from land use was too low and only about 0.03 per cent of Gross Domestic Product (GDP).

Vu Thi Luu Mai, a congresswoman from Hanoi, said that there are five reasons that should be considered before the pilot property tax is applied to HCMC.

Firstly, property tax law may affect the fairness in the application and enforcement of policies when only people owning land and property in HCMC have to pay tax.

Secondly, if property tax is applied, it will affect the real estate market, the stock market and even HCMC's attractiveness as an investment destination.

Thirdly, the necessary and sufficient conditions for the application of property taxes are not yet complete. In order to make the successful application of property tax law, it is necessary to have a modern and accurate database on real estate status.

Fourthly, the pilot application is too short.

Fifthly, in the case that pilot specific mechanism is not applied to all provinces of Vietnam, the problem is how to deal with people who have paid this property tax.

In addtiontion, Pham Thanh Tam, a congresswoman from Hau Giang, wondered that tax on property applied to HCMC first may create great variability in the investment environment so in the pilot phase, it should be implemented in both Hanoi and HCMC.