President Ma Ying-jeou on the morning of August 24 convened a press conference to discuss government policies on land, public housing, and land-related tax matters. Vice President Vincent C. Siew, Premier Wu Den-yih (吳敦義), Vice Premier Sean C. Chen (陳冲), Executive Yuan Secretary-General Lin Join-sane (林中森), Interior Minister Jiang Yi-huah (江宜樺), Finance Minister Lee Sush-der (李述德), and Council for Economic Planning and Development Deputy Minister Hwang Wang-hsiang (黃萬翔) were present for the press conference.
The president acknowledged that a series of disputes has arisen over the past year associated with government expropriation of land. At the same time, housing prices in some portions of Taiwan remain at extremely high levels, causing concern and anxiety among the younger generation about the wealth gap that has arisen. President Ma said that he has been quite concerned about these issues. Consequently, over the past year, he has assembled the vice president, the premier, and the heads of related government agencies on a number of occasions to exchange opinions on land issues.
The government has instituted a number of important measures over the past months, he said. First, the president pointed to "the specifically selected goods and services tax," which people colloquially refer to as the luxury tax, saying that this has helped to combat short-term speculation in the real estate market. Secondly, the president said that the government is promoting the establishment of reasonably priced for-sale and rental housing projects. Third, the nation's Central Bank has strengthened risk controls on lending for real estate, he said, while the fourth measure has been the Executive Yuan's move to abolish the temporary halt on the levy on vacant land. The fifth measure, he said, is amending the preferential tax rate on parking lots established on vacant lots, raising a previously preferential land tax rate from 1.0% up to 1.0%-5.5%. Lastly, the Ministry of Finance is carrying out a thorough check of luxury estates established under the guise of farmhouses and high-priced dwellings that are not owner-occupied, the president said. This last measure is aimed at determining whether tax has been properly assessed on luxury dwellings that are sold prior to completion of their construction.
President Ma stated that some of these moves are amendments to laws, while others only administrative measures that still need to be codified into law. The president remarked that he is confident that a responsible government will have the determination to defend justice in land ownership, housing ownership, and tax structure, thereby enabling the public to live and work in peace and contentment. In order to achieve these objectives, the government has held a series of discussions over the past year and a number of conclusions have been reached as set forth below.
First is the revision to the Land Expropriation Act, under which expropriated land will be purchased at market value. The president stated that since disputes arose in Dapu of Miaoli County and Xiangsiliao in Erlin Township of Changhua County last year over the expropriation of land, the Executive Yuan has actively sought to respond to the concerns expressed by the farmers, and the premier has personally presided over a number of coordination conferences related to this issue. Premier Wu, he said, charged the Ministry of the Interior with the responsibility of carrying out a thorough examination and revision of the Land Expropriation Act in an effort to respond to calls for reform.
The Executive Yuan has completed a review of draft revisions to the legislation and is scheduled to approve them on August 25 at the weekly Cabinet Meeting, following which the amendment bill will be submitted to the legislature for deliberations. The president said the government hopes that the ruling and opposition parties will support the revisions to the act and pass them in the coming session.
Commenting on the content of the amendment bill, the president explained that the proposed provisions clearly state that any land expropriation must be carried out with the public interest in mind. In addition, the expropriation must be deemed necessary, and the impact must not fall disproportionately upon any one person or group of persons. The legislation also mandates that expropriation of farmland will not be allowed unless it is in the public interest, or the land is needed for a major national construction project. This measure is aimed at protecting our valuable land resources and ensuring food security, President Ma said.
Even more important, he pointed out, is the compensation that will be paid in the expropriation process. The president said that the government will use the market value of the land rather than, as is currently the case, the property’s announced current price, updated once a year, plus an additional 10 to 40 percent, in providing compensation for landowners of expropriated land. In addition, in the future, local governments will evaluate land transaction prices of expropriated land every six months, the data of which will be treated as the "market price" of the land, he said. This will be a change from the current system in which city and county governments announce published land values each year. The president said that the new method will serve as the basis for determining compensation paid out by the government for expropriated land. Consequently, the public, which helps the government carry out major construction projects by offering up land, will see more reasonable compensation based on actual market values. This will help to realize the principle of justice in land expropriation, the president said.
Second is the establishment of a public and transparent system in which actual transaction prices of real estate will be reported. The president said that this touches on issues related to "residential justice." The Executive Yuan back in April of last year announced and began implementing a program to ensure a well-balanced real estate market, the president pointed out. One of the measures in this package was the creation of a transparent system in which transactions in the real estate market would be reported, he said. In other words, the policy of having this transparent reporting system was already set forth last year, the president added. Over this time, the Ministry of the Interior has revised the Act Governing Real Estate Brokerage with the aim of promoting legislation to ensure that transaction reports indicate actual transaction prices. This will help prevent people from jacking up prices, and will protect the interests of people seeking to buy and sell homes, the president said.
In an effort to even more comprehensively ensure the reporting of actual prices, the Ministry of the Interior in June of this year unveiled draft revisions to the Equalization of Land Rights Act and the Land Administration Agent Act. This trio of bills will together work to establish a system in which real estate transactions are reported in a public and transparent manner, the president remarked. After the revisions are enacted, all parties engaging in real estate transactions, whether it be real estate brokers, land administration agents, or buyers and sellers, will be required to document the actual price of the transaction, and government authorities will, based on the actual prices logged in the system, establish a real estate transaction database. This system will first be introduced on a small-scale basis, following which it will be gradually expanded to cover all real estate transactions.
President Ma said that the establishment of this system will help promote transparency in real estate transaction data and will help to put a stop to rampant speculation. When people buy homes, he said, they will not end up paying more than the properties are worth due to insufficient access to information. The president said that transparency in land and real estate transactions has become a global trend and that he believes this measure will protect the interests of consumers and aid in the realization of "residential justice." He called on the Executive Yuan to quickly forward these three bills to the Legislative Yuan for screening, and urged the legislature to pass the amendments in the next legislative session.
Third is raising the tax on vacant land to prevent hoarding. President Ma remarked that land development is a necessary measure to hasten urban development. However, over the years some private land has long sat idle or been underutilized. Some parties hoard land and then reap enormous profits when they sell it. This practice has made a bad impression on the public and is one reason for the widening gap between rich and poor here, the president said.
In January of this year, the government already lifted the moratorium on the levying of the tax on idle land in an effort to prevent the transfer of private land from resulting in unreasonable profits, the president explained. However, many are still skeptical, feeling that if local governments do not implement related measures, land hoarding will go on undeterred. In response, the president called on the Executive Yuan to actively coordinate measures in areas where housing prices are on the high side to carry out a thorough audit of hoarded land in accordance with Article 26 of the Equalization of Land Rights Act. With regard to private land, he said, authorities may, depending on the state of urban development, adopt zoning plans that require the construction, expansion, modification, or re-building of structures in specific zones. Those who do not take the required action within the designated time frame will see the tax on their vacant land raised to between two and five times the regular rate. Otherwise, the government will acquire the plot at a publicly announced price. This should deter land speculation, hasten the development of vacant land, and help to ease public discontent.
At the same time, measures will be introduced to reward those local governments which take the initiative to uncover land hoarding, thereby generating tax for the government. They will receive a larger portion of the centrally-allocated tax revenues from the Executive Yuan, he said. This measure will be carried out once a proposed amendment to the Act Governing the Allocation of Government Revenues and Expenditures is passed by the Legislative Yuan (where it is currently under deliberation). President Ma said the government hopes this measure to raise taxes on vacant land will encourage those who hold rights to the land in question to rapidly develop it and generate business opportunities using it, thereby increasing jobs, bolstering the economy, and generating more tax revenues.
Fourth is the hastened passage of a Housing Act to help realize "residential justice." President Ma stated that a draft version of the Housing Act has been prepared by the Ministry of the Interior in order to create a healthier real estate market and promote a fair subsidy system for housing. In addition to providing a legal basis for social housing projects, the legislation will also set forth basic standards for residences and prevent residential discrimination. At the same time, consumers will be provided with comprehensive information on housing. The Housing Act, he said, has become a focal point within society, as it shows whether the government is truly committed to promoting a long-term policy on housing. In light of this, the president said that he wants to express the government's standpoint on this legislation. The Housing Act bill, he said, absolutely must be forwarded to the Legislative Yuan for deliberations in the coming legislative session. He expressed his confidence that the ruling and opposition parties will support this legislation and that the bill will be passed.
Fifth, the public can rest assured that the government has no intention of raising taxes on owner-occupied homes. President Ma remarked that if you are using the home for yourself and your family, you won't see your taxes raised. He commented that everyone is aware that the vast majority of people here spend the greater portion of their lives working hard to complete the purchase of their home. These people are using their dwellings for their own use, and the government will absolutely not increase the tax burden on these individuals. No one has to worry about this, he said. The luxury tax (which will be levied on vacant land, luxury villas that have been deceptively registered as farmhouses, and the speculative trading of luxury homes) is aimed at speculators, he said. Only a limited number of people fall into this category, he said. President Ma said the government does not want to see abnormal development of the real estate market cause the wealth gap to widen. It is the government's responsibility to turn around this unjust situation, he added.
The objective of all these revisions and administrative measures, the president said, is to demonstrate that the government is committed to ensuring "land justice" and "residential justice," and to reducing the gap between rich and poor. The government is aware that any reform will impact the interests of someone or other. However, President Ma stated that we must look well into the future and realize that having a well-balanced real estate and land market, establishing a fair transaction system, and creating an environment that promotes greater stability in land prices is not only in the interest of the general public, but also to the benefit of construction companies and real estate agents.
Consequently, the government will work to overcome all challenges and spare no effort in this initiative. President Ma called on the Executive Yuan to complete work associated with the aforementioned legislation as soon as possible. He also said he hopes that the ruling party's legislative caucus will negotiate with opposition parties to pave the way for passage of these bills at an early date in order to meet the expectations of society and to create a truly just society in Taiwan.