Friday, 23 May 2014

Experts propose idle land tax to thwart speculation

The government is urged to levy taxes on idle land to curtail property speculation which has fuelled property prices in the past years.

“If tax is collected on vacant and idle land, this will encourage the development of the land (for commercial use). Then, few will keep the land idle for a long time. It will be helpful for the country’s development,” said Myint Swe, retired deputy director general of the Department of Human Settlement and Housing Development.

A retired official, who asked for anonymity, noted that rich people in Yangon tend to invest money in land without any development project in hand. So far, there has been no measure to control it.

An expert in the property market urged the government to take some actions against the idle land plots, as many landlords with land plots around Yangon and industrial zones have hoarded the plots, waiting to cash in on huge profits.

Myanmar has witnessed a significant increase in land and property prices over the last two years. Before, consumers spent hugely on vehicles but car prices have fallen after the government lifted up the import barriers. Meanwhile, fewer consumers have stored their wealth in gold. These consumers have recently shifted their money into the property market, leading to speculation and manipulation. High land prices have driven property prices beyond the majority of people.

Aside from the absence of measures against speculation, there is also lack of the system to effectively tax landlords’ property transactions.

“The wealthier a person, the larger the tax he needs to pay. It is the opposite in Myanmar. Those having little are subjected to standard taxation, while the wealthy enjoys tax exemption," said Dr Maung Maung Soe, a retired professor of applied economics department at the Yangon University.

Law experts asserted that manipulation of the property market is against the Constitutional Article 36 regarding monopolies. The article prohibits any attempt to hinder market competition and manipulation.

"Everyone knows manipulation has driven up property prices. The government must review its policy. In fact, they should investigate property ownership and issue new land certificates,” said lawyer Than Maung.

The Myanmar Federation of Chambers of Commerce and Industry recently received a complaint by Japanese investors, over the exorbitant property prices in the country.

“If our land price is higher than that in New York, investors will be scared away. This could be prevented constitutionally. The executive power should be effectively applied to handle the situation. As you know, black money is also entering the property market. The government should tackle it,” added Than Maung.

source: Eleven Myanmar
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