In order to increase budget revenue, limit speculation and fallow housing in projects, the People’s Committee of Ho Chi Minh City recommends taxing second or higher real estate.
Taxing the second house, land or more
The People’s Committee of Ho Chi Minh City has just submitted to the Government the formulation of a resolution on pilot mechanisms and policies to create motivation for the city’s development. This Resolution replaces Resolution No. 54/2017/QH14 (Resolution 54).
After 5 years of implementing Resolution 54, Ho Chi Minh City has achieved some results, but basically still has not achieved the set targets, especially mechanisms and policies so that the City can mobilize resources while the space is still very large.
Based on the opinions of many organizations, ministries, experts and related agencies, the People’s Committee of Ho Chi Minh City proposed the contents of recommendations to be included in the draft Resolution to replace Resolution 54.
Ho Chi Minh City wants to pilot the second or more real estate tax collection to limit speculation.
Regarding investment management, Ho Chi Minh City wants to have policy to remove “bottlenecks” related to investment procedures; land allocation – lease mechanism; Select investors with projects of urban embellishment and renovation of old apartments.
An important content in order to generate revenue for the budget and increase the autonomy for Ho Chi Minh City in allocating local budget revenues is also recommended as a budgetary issue.
Specifically, Ho Chi Minh City proposes to have the right to decide on additional tax policies for people’s land use rights and property ownership on the land of the second or more real estate.
According to the People’s Committee of Ho Chi Minh City, the purpose of this regulation is to pilot real estate tax policies, as a practical basis for developing general policies in the future. At the same time, increasing stable and sustainable revenue for the local budget, limiting speculation and abandonment of houses and residential land in current real estate projects, which wastes social resources.
In 2022, according to the decision of the National Assembly, Ho Chi Minh City will enjoy the budget according to the regulation rate of 21%. The city proposed to keep this rate unchanged until the end of 2025, and at the same time not included in the adjustment of tax revenues and fees applied in the pilot application such as a second property tax or new fees and charges.
According to the People’s Committee of Ho Chi Minh City, the above regulation is in line with international practice when “real estate tax is only used to invest in improving the welfare of people in the locality where tax revenue is generated”.
Compensation for the right type of land acquired
In the field of urban management and environmental resources, in addition to the proposal to retain the regulation to decide to change the purpose of using rice land over 10 hectares, Ho Chi Minh City proposed to add some contents such as:
Decentralization for Ho Chi Minh City to be approved for local adjustment of urban planning within the overall urban planning approved by the Prime Minister; make detailed planning tasks and projects and collect comments from the community at the same time to shorten the time;
Decentralization for Ho Chi Minh City is allowed to decide on contents related to: Construction of commercial housing, social housing, resettlement houses, treatment of old apartments, houses on and along canals… because this is major bottlenecks in current investment projects;
Fully decentralize HCMC in formulating and issuing land price adjustment coefficients for calculating land use fees for all land plots and parcels;
Allow Ho Chi Minh City to pilot the “proportional land” compensation mechanism for site clearance to ensure flexibility according to the requirements of each project and the voluntariness of land users;
Let Ho Chi Minh City pilot the separation of compensation, support, resettlement and site clearance into a public investment project independent of group B projects in the area to effectively use public investment capital and avoid the situation of “capital waiting for the project”, capital pool due to lack of space.