Penang mulls luxury property charge

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How do we curb mounting speculation in the property market? Can the Penang state government do anything to stop any over-heating and cross-subsidise affordable public housing?

Yesterday, a reader of this blog who goes by the handle of ‘Sam9W2CFS‘ tweeted to me several links to articles on how other countries are handling their own over-heated property markets. He also sounded out state government leaders about the possibility of a tax on luxury properties.

This morning theSun reported that Penang is considering a policy to impose a special charge on super-condo projects through the state’s two municipal councils, MPPP and MPSP. Chief Minister Guan Eng has he had directed the relevant exco members to look into this. Revenue from the special charge would be used to cross-subsidise low-cost housing development in Penang.

Here are a few of the links that Sam sent out.

China (Source: China Post)

These advantages of having a real estate tax have been bandied about since 2003, when China first started to mull over its implementation.

By making owners pay an annual levy on their property, the tax seeks to discourage speculators, by making it more costly for them to hoard empty flats until their values rise several years later, explained Professor Xie Baisan of Fudan University.

“The tax would hopefully force multiple-home owners to rent or sell their empty units to cover the cost of the levy, thus allowing prices to fall,” he said.

A tax on luxury properties would also take income from the rich to build subsidized housing for the poor.

Costa Rica (Source: Costaricalink.com)

The new luxury tax law went into effect October 1, 2009 and affects owners of homes worth more than 100 million colones or $172,000. For example, a homeowner with a house worth just 100 million colons could expect to pay a tax of just one-fourth of a percent. That is 250,000 colons or about $430. The law, No. 8683, is designed to provide funds to give housing to the extreme poor. The income from the tax is earmarked for the Banco Hipotecario de la Vivienda, which would use the funds to build housing for the poor now living in slums, according to law.

Taiwan (Source: monstersandcritics.com)

Taiwan eyes luxury tax to narrow rich-poor gap

Apr 15, 2011, 17:08 GMT

Taipei – The Taiwanese parliament approved a luxury tax on Friday aimed at curbing property speculation and narrowing the gap between the rich and poor.

The measure could come into effect on June 1, pending approval by the Cabinet.

President Ma Ying-jeou welcomed the passing of the bill, saying it will help correct injustice in distribution.

‘It is hard to totally wipe out the rich-and-poor gap, but the government will try its best, and will take measures like taxation, and social welfare to prevent the gap from widening,’ he said.

Under the bill, property in which the owner does not reside that is sold within two years of purchase will be taxed between 10 and 15 per cent.

The bill levies various taxes on luxury goods. Taiwan is one of the world’s top luxury markets.

Of course, the federal government should seriously look into revamping the real property gains tax and tightening the criteria for housing loan eligibility.

READ MORE:  Why massive land reclamation in Penang is not a great idea

When projects are completed and sales are launched, only genuine buyers should be allowed to buy and not agents and connected parties who make block bookings to create the illusion of demand.

Finally, tighter controls over foreign purchases of local property are needed to reduce speculative activity to a minimum.

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Lechmy Pala
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Lechmy Pala

the mtv Athiradee Karansays it all : we can overcome the greedy & evil property scumbags in stylish and peaceful manner

rilak-kuma
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rilak-kuma

Sivaji The Boss my all time favourite movie !
Why ? People Power can work wonder !

Robot
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Robot

Since Merdeka until now sad to say there is no such Superstar Sivaji character who cares for the poor among our ruling community elites. Look at Kampung Buah Pala crisis, none stand up like the Superstar Sivaji.
Looks like we idolise Hollywood and forgot Bollywood values that can inspire us (eg flicking of coin in the movie !)

SP
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SP

Robocop & Terminator are fantasy figures.
We need real like character like Sivaji The Boss (brilliantly acted by superstar Rajanikanth) combined with Bruce Lee’s flair (from The Big Boss) to be the true champion of the people !

maniam ganapathy
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maniam ganapathy

Each time I watch my ‘Sivaji The Boss’ DVD, I always wonder why our MIC cannot be inspired to alleviate the poor conditions of our indian community. In the meantime I have witnessed many of my chinese friends who have (struggled) for justice…

rahoo kandi
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rahoo kandi

India learning from Penang or otherwise ?

“NDTV reported on its website that farmers were paid a little over 800 rupees ($18, RM53) per square metre for the land on which six townships are to be built alongside the highway. That same land was sold to developers for 3,200 rupees a square metre and resold as residential plots for 14,000 rupees a square metre.”

http://in.reuters.com/article/2011/05/12/idINIndia-56945120110512

tunglang
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tunglang

The middlemen, the traders, the rich fellas, the monopolists keep getting richer b’cos they have the zealously guarded ‘secrets’ and ‘ways’ of getting richer by the minutes.
The simple minded poor are left to defend for themselves, in unfair circumstances or fraudulent land deals. No humanist feelings can be expected of these rich predators of post-modern hyper materialism and imbalanced distribution of abundance of earthly riches covetously reserved for themselves.

Dato Kramat
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Dato Kramat

developers n ‘authorities r shielded by official secret act which people like us have no access to expose.

$ (may be) used to fund election campaigns. so next time if there’s election, stuff like free mineral water (could be) kickbacks.

Time to call The Terminator in action to wipe out those unscrupulous fellows OR Robocop OR Ghostbusters that can help the underpriviledged poor souls.

Heeren
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Heeren

Malaysia should engage Singapore’s HDB to build low-cost flats for poor people?

Doreen
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Doreen

On top of that, you will also need to PAP’s Town Council to manage the housing estate.

Salam
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Salam

The starting salary for an engineering graduate 10 years ago was about 2,000 – 2,500 and now , it is still about 2,200 – 2,800, depending on the employers. As such, if we include inflation, Malaysian in general, actually experienced a shrinking take-home pay. However, everything is increasing in price.. the craziest is housing and food. We always talk about efficiency and productivitiy must be improving throughout the years. As such, building a house, with higher productivity and efficiency, should have reduced much waste and reduce the cost. But we are experiencing a crazy escalating pricing of housing (even after… Read more »

tunglang
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tunglang

Even with cheapo Indonesian workers, the cost of building is still escalating. And add a few minimalist designer lamps and China made alarms and the home price is already hi-end designer price!

C’mon developers, we know what is arithmetics even counting backwards with ‘myfoot’ toes on mini abacus.

Seok Seok Buy Buy
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Seok Seok Buy Buy

bayan baru / relau area (few plot of vacant land left) got so many housing projects coming up (bayan city, arena, reflections just to name a few) – developers hope for ‘rush herds” buyers/speculators during launch claiming high % sold out already during earlier soft launch etc just go to D’Piazza Mall (next to Mayang mall near Sunshine Sq) you will notice hundreds of empty shoplots despite OC obtained more than 2 years allready. mayang mall itself sort of failure with many tenants moving out already. Many condos at nite the residence no light up meaning no residence at all.… Read more »

Helmi
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Helmi

The interest rate in Malaysia is ridiculously low even with high inflation abound. So the rich fellows ‘park’ their money in property, hoping to cash in when the price escalate.

Uncle LBK
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Uncle LBK

only the foolish folks with no deep pockets try to emulate the rich hoping to make quick bucks. a few of my froends did not heed my advice and so far two have eaten bitter pills – got stuck cannot blame developers bcos already signed documents/commitments

kee
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kee

A land owner in Batu Ferringhi said the land in Batu Ferringhi has been converted from hill land. So, he said he can now build and sell. I can safely presume all the conversion had been dealt with since Gerakan’s time as the land he owned was way before 2008. I read that E &O is going to reclaim more… for luxury housing??? or affordable ones??? Indeed, a strict policy has to be imposed on foreign investors on an urgent basis. I just heard that the rental in Gurney Park is fetching between RM3k and RM4k now. The Gurney Park… Read more »

Dato Kramat
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Dato Kramat

RE : I pity the youngsters, we must not let the foreigners and the local rich boys to ride on our youngsters !!!

Developers like these category of people who can patronize new polished malls like Gurney Paragon, Tanjung Quay etc etc
while the poor ones apply to be GROs (don’t blame them because they have mouths to feed).

More local GROs besides foreign ones will gather in penang hotspots as a result.

Good or bad debatable. Anil can be the moderator.

bigjoe
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bigjoe

This idea is more complicated than it seems. The idea of taxing luxury to help the lesser is as old as the oldest profession. All experience says that by far efficient method is to generate revenue to fund programs rather than straight tax. In other words, the best way is to generate supply of land for luxury properties and sell it to fund it rather than tax property the state does not own. At best what the state can do is charge a tax when it built infrastructure that enhances property values. A straight tax on already expensive property or… Read more »

sailor
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sailor

PR exercise la … he only say to gain public support… and he doesn’t offend the super developers either — cos they are going to go easy on super condos for the moment — alreadly cukup glut la…

tunglang
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tunglang

Nobody talks about taxing the developers. Their exceeding, unimaginable greed is to build luxury and super luxury housing with super value added features that bring in far greater stretches of profits rather than to build simple low cost or affordable houses for pressing social needs. Tax them based on luxury units sold. Tax them at higher percentages. This will curb oversupply of luxury housing in land scarce Penang in their greedy anticipation of surreal speculative boom causing land price to initially soar thus squeezing out the economic sense of building affordable houses. Already we are hearing the always omnipresent excuses… Read more »

Penang #1 Boy Scout
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Penang #1 Boy Scout

tunglang u not aware the interconnection btwn the power n housing developer past decades ?…. u $upport me, then i $upport u syndrome lah…. no need to elaborate further …..

tunglang
Guest
tunglang

Who doesn’t know? It takes no insider knowledge.
It is now up to PR Gomen to change the corporate $$$-hostage for political support game. Otherwise, it’s no different from the (political) eunuch Gerakan ostrich species.
Change Manifesto of PR must truly translate into caring action what it promised 3 years ago. No more talking into tin susu kosong.

Penang #1 Boy Scout
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Penang #1 Boy Scout

if tin kosong of present Penang Gomen, then don’t expect you to rally at Han Chiang or Red Rock Hotel at Macaslister Road, ok ? by the way, i am the new boy scout who advocates servicing the people of all classes in Penang. Ex boy scout a disgrace to ready to serve motto. Just noticed Red Dot’s Foreign Minister George Yeo being a true gentleman declined to be in politics when he was ousted out in Aljunied election last Saturday. Can’t be said about our back door minister ex boy scout still talkin about transformation program to improve our… Read more »

tunglang
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tunglang

If you hear no tin kosong echoes, then something must be seen to be done to improve our housing situation. The development as it is now is not serving the young and those not extremely super rich any tangible promise of affordable home ownership in Penang. Not even the middleclass can afford housing to match their lifestyles. Downshifting seems to be the economic and lifestyle trend of many. Nothing should stay the same after 308 tsunami. Innovative leadership should always feel our heart beats, our pulses of hopefulness and aspiration in the continuos socio-economic-political development. This is not to say… Read more »

Penang #1 Boy Scout
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Penang #1 Boy Scout

to be fair some developers notably IJM contributed to the jelutong highway that waive toll fee — however not sure if fair deal signed as they get the lucrative reclaiming The Light project as part of the deal. The tangibility of the deal is not easy to digest by normal folks. My 2 sen worth of info is that Penangites in the island should be prudent in spending (avoid extreme capitalism lure from mall/branded product shopping culture) as very soon Penang will be a high cost place to live. Just to quote an example, barang naik phenomena is gonna haunt… Read more »

PKM
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PKM

… Lim Guan Eng is as money face as his predecessor…

PKM
Guest
PKM

Why should we tax the property developers when it was the property buyers shoving money into their face begging to buy yet another house?

tunglang
Guest
tunglang

Whoever profit-eh from men, he shall pay a fair share back to society/humanity in the form of taxes, the proportion of which shall be honestly legitimate, generous and in the fair spirit of giving from the heart.
Whoever shall give, shall receive in return far exceeding his initial giving.

SamG
Guest
SamG

If this proposal is successfully implemented, annually the Govt can provide funds in more than one way to help the poor. It could be providing Downpayment forn the poor and let them continue with the monthly payments. Using the money to upgrade some of the run down public housing Since state Govt can’t impose taxes, it can be in the form of Super Assessment on the top of the normal local council Assessment. Separating it will be easier for accounting purposes and allocation. PR Govt should also include Luxury homes above a certain price, say RM1 million. At least the… Read more »

moo_t
Guest

As I suspected, most people favor the “silver bullet” to do miracles, which rarely work in government level. In addition, Penang government cannot enact luxury tax in the state level. So the “silver bullet” most people though about are property assessment tax. However, the tax are not going to do much to curb speculations. There is no shortcut to properties speculation. In EU, families rarely rush to get a house, because i. Return of capital on house rental return will take 30-40 years. Thus kill the interest middle income people borrow money for rent seeking. ii. As of i. the… Read more »

PKM
Guest
PKM

Why should we help the poor?

They are lazy and stupid.

Let the poor be poor if that is what they want to be.

tunglang
Guest
tunglang

We are all created equal in God’s image. To say the poor are stupid is a slap on God’s face. To measure each one of us on fallible man-made terms of seemingly intelligence, net assets and social status/class is narcissistic worthy of the Congo wilderness of self pruning Chimpanzees.
If you think a man is that bad for being poor, wait till the days when you may also suffer the same ‘poor’ state of existence. Then you can look at the mirror and curse the idols … or whatever you believe till Kingdom comes.

wira
Guest
wira

Can a state government in Malaysia introduce taxes other that what are allowed by the constitution?

PKM
Guest
PKM

… Do not forget that DAP is a member of the world socialist movement.

They hate wealthy people.

They want to tax the wealthy people to death.

That is why Anil Netto, a pinko, is so elated when Lim Guan Eng got elected.

tunglang
Guest
tunglang

There are more poor people dying each day than the rich … wining and dining. Pls spare a thought for the poor. Anyway, the gap between the rich and the poor is getting bigger by the minutes. Even the middle class is not spared, in fact middle class people are the most stressed in this present economic disaster unprecedented since the 1930’s and 40’s. So who is left to enjoy in luxury in spite of the decline in living standards worldwide are the rich …. The middle class days are gone, my friends. One good … example of wealthy-not-enough is… Read more »