Taiwan to impose tax to curb home prices

A planned "luxury tax" that aims to rein in property speculation in Taiwan came a step nearer on Wednesday when it breezed through its first reading.

The Finance Committee gave the go-ahead to the first draft of the bill after President Ma Ying-jeou ordered legislators in his Kuomintang party, which holds a majority on the committee, to help push it through.

The move comes as house prices in Taiwan have soared, leading to tensions over the widening gap between the island's rich and poor that has seen Taipei become one of Asia most expensive cities.

"The approval of the bill today marks a triumph of social justice ... hopefully it will help crack down on short-term speculation," Kuomintang legislator Fei Hung-tai, a committee convenor, told reporters.

Fei expected the committee to pass the second and third and final reading of the bill before it is voted on by parliament towards the end of the month.

Under the provisions of the bill anyone who sells non-residential properties and vacant land within two years of buying it will face a levy of up to 15 percent.

It also includes plans for a 10 percent special sales tax on luxury goods such as yachts, private jets, furs and high-end furniture.

The bill was introduced as various government data indicate Taiwan, once a relatively equal society, is gradually seeing a more unequal distribution of wealth, with property prices emerging as a key public bugbear.

The most prosperous 20 percent in Taiwan reported average disposable incomes of Tw$1.79 million ($60,700) in 2009, more than six times that of the poorest 20 percent -- the largest gap since 2001.

At the end of October, the average price of property in Taipei hit $4,614 per square metre ($430 per square foot), up 15 percent from last year, according to property agency Taiwan Realty.

By The Star