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Tainan Raising House Tax to Improve Local Finances

Tainan City Government has announced that house tax will be raised step by step from this July, with the standard values on which the tax is calculated being gradually adjusted upward over the next three years. Explaining that the adjustment is targeted at reducing inequality, Mayor William Lai added that Tainan is the last of Taiwan’s six special municipalities to raise the tax, and that the impact on tax payers will be the lightest.

The Finance and Local Tax Bureau said that the standard values of housing units have not been raised since 1984, leaving them far lower than actual current market values. The Control Yuan, the Tainan Audit Agency of the National Audit Office, and the Ministry of Finance have been urging Tainan City to adjust the values since 2013.

The adjustment will be applied to housing with licenses issued after July 1, 2001, meaning that about 18% of housing units in Tainan will be included in the tax hike. Tainan City Government emphasizes that the standard values will be increased gradually over a three-year period, to minimize the impact on house owners.

Supporting the necessity of this tax reform, the Tainan Audit Agency of the National Audit Office points out that, after staying unaltered for more than 30 years, the standard values have become completely divorced from actual real estate values. Since local governments depend on the house tax as one of their main sources of revenue, their finances will be increasingly constrained if the standard values remain unadjusted.

Stressing that the collection of increased house tax is essential for improving local finances, Mayor Lai has given assurance that the extra revenue from it will be used to fund infrastructure for transportation, water resources management and education, thereby improving Tainan’s living environment.

Although former Premier Sean Chen criticized the house tax as unconstitutional and a violation of people's basic living rights, Deputy Minister of Finance Su Jain-rong cites a legal interpretation by the Justices of the Constitutional Court as firmly establishing the legitimacy of the tax.

Tainan City Government points out that many advanced countries, including the U.S., Japan, Korea and Singapore, also levy property tax on land and housing, and sometimes adjust it as a means to curb soaring house prices. The Ministry of Finance says that all six of Taiwan’s special municipalities, as well as several other local governments, plan to raise house tax next year.

Tainan City Government says that the raising of house tax is wholly legitimate and reasonable. The new standards for taxing property are based on the idea of fairness, and the incremental implementation of the increase will ensure that it does not impose too heavy a burden on tax payers.