The ministry has tasked its tax policy department with developing the plan, deputy minister Huynh Quang Hai confirmed to Tuoi Tre (Youth) newspaper on October 30.
Hai admitted that it is unlikely that the new tax policy will be issued before next year, but “it must be enacted in the future,” given the current tight state budget and the fact that “other countries have been collecting this kind of tax for years.”
The finance ministry began considering taxing multiple-home owners as early as 2009, with three possible tax plans on the table then.
The first plan was to levy fixed taxes on the second and any subsequent homes. Buildings under two stories would be exempted, while those with three stories and above would be subject to a tax of VND2,000 per square meter per year, according to the tentative tax plan.
The second plan considered a 0.03 percent tax on the value of the second and any subsequent homes after deducting VND1 billion (US$44,643). For example, if the house is valued at VND1.2 billion (US$53,571), the owner would pay a 0.03 percent tax on a VND200 million (US$8,929) value per year.
The final proposal sought to tax the extra area of the house, after deducting 200 square meters, with the tax ranging from VND2,000 to VND4,000 a square meter per year. This meant that if the house measured 300 square meters, the ‘taxable area’ is 100 square meters.
The plan failed to meet with approval from the lawmaking National Assembly, with lawmakers saying it was not the right time to impose housing taxes and that taxes collected would not contribute significantly to the state coffers.
However, seven years on, the finance ministry and several experts now believe it is high time the plan was reconsidered.
In an interview with Tuoi Tre on Sunday, Professor Dang Hung Vo, former deputy minister of natural resources, said that Vietnam is lagging way behind other countries in imposing property tax.
Vo said homeowners must pay taxes, and that tax rates must be progressively increased on the second and any subsequent homes.
“Some houses are built on very large land plots so the owners should pay taxes that ensure social equality,” he underlined.
Prof. Vo explained that the current social inequality meant that the state only collects a modest amount of land use tax from homeowners, which is insufficient to cover expenses that maintain working public amenities.
Vietnam sets a land use tax of 0.03-0.07 percent based on the government-stipulated property prices, while other countries impose taxes of 1 to 1.5 percent on the property's market price, according to the professor.
“The government’s prices are always much lower than market prices,” he said.
“For instance, I have a 150 square meter house in Hanoi but only have to pay VND1 million (US$45) in land use tax per year, which is unreasonably low.”
Assoc. Prof. Nguyen Dinh Chien, from the tax department of the Academy of Finance, backed the idea that people who own multiple homes pay taxes that ensure social equality.
“Multi-home owners only live in one of their many houses, and the remaining are up for rent,” Chien said, implying that their rental incomes are to be taxed.
Dr. Do Thi Thin, another tax expert, said people who own multiple houses are high-income earners so “regulating their income via tax” will create fairness.
Other industry insiders said the multiple-home tax will prevent property speculation.
“As they do not have to pay any taxes for the ‘extra’ properties, and the land use taxes are modest, many people are willing to ‘stockpile’ homes in the hope of deriving profit,” one financial expert said.
Property speculation sometimes sends house prices skyrocketing, making them unaffordable for buyers with shallow pockets.