Standing committee to discuss reduction in property transfer stamp duty

Friday, January 16, 2009
Issue 587, Page 5
Word count: 640
Published in: Macau Daily Times

By Poyi (Natalie) Leung

The bill to reduce the property transfer stamp duty from three to one percent for apartments valued at over three million patacas was passed on to a standing committee for deliberation at the Legislative Assembly yesterday.

However, a number of lawmakers proposed to the government the adoption of a progressive tax rate structure, so that the more expensive a flat is, the more transfer stamp duty the buyer will need to pay.

For first time home buyers who purchase a flat valued at three million patacas or below, the government will continue to exempt them from paying any transfer stamp duty.

Secretary for Economy and Finance, Francis Tam Pak Yuen and his cabinet attended the plenary meeting at the Assembly to present the bill to lawmakers.

According to Tam, the revision was a response to society that deemed the three percent rate was “too high” compared with other types of taxes in Macau, and also to “further ease the burden of residents in home purchase”.

If the bill is passed at the Legislative Assembly, Tam said the expected revenue of “assets transfer stamp duty” in the 2009 fiscal year will decreased by 273 million patacas to 227 million patacas.

Vice president of the Legislative Assembly, Lau Cheok Va, agreed that different rates of stamp duty should be set out for different property prices.

“If no such structure is in place, a person can actually save more in tax for buying a 10 million pataca flat than buying a three million pataca one,” Lau said.

“Thus the reduction in stamp duty won’t be able to truly benefit most of the ordinary citizens. We must have to maintain fairness and rationality,” he added.

Lawmakers Kwan Tsui Hang, Ng Kuok Cheong and Leong Iok Wa also proposed the need to adopt a progressive transfer stamp duty structure, with some saying “wealthy people should pay higher taxes than those who aren’t”.

Leong also said that without such structure, a huge gap would be resulted with neighbouring regions’ transfer stamp duty amounts.

If two flats were both valued at 6 million dollars and patacas respectively in Hong Kong and Macau, the Hong Kong buyer would need to pay 180,000 in transfer stamp duty whilst in Macau the person would only have to pay 60,000, Leong added.

The Secretary stressed that the government would be open to any suggestions made by the standing committee in the future.

At the same time, Fong Chi Keong said he was concerned that developers or flat owners would “intentionally lift their property prices to three million patacas” as buyers could still be entitled to the full stamp duty exemption.

Lee Chong Cheng said a two percent reduction could not significantly encourage local people to buy property especially with the current economic environment, adding that the slowdown of the real estate market was “in fact caused by supply over demand”.

However, Tam said one of the aims of the bill was to “alleviate the financial burden of residents”, and thus “no matter how much the deduction is, it will still be able to achieve such objective”.

In addition, Ng Kuok Cheong said the revision would further “narrow Macau’s tax base and eventually make it too dependent on the single source of the gaming tax”.

Tam responded that the government never had the intention to tighten the tax base or rely too much on the gaming sector, but it was the “reality of Macau’s economy”.

He also said that the SAR’s policy orientation was to “expand the sources of income and achieve more diversification”.

On the other hand, the Assembly yesterday also saw the passing of the bill that will give both locals and non locals, as long as they are on Macau soil, the right to obtain lawyers’ assistance regardless of them being witnesses, suspects or declarant in a court case.

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