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Fair tax rates will end Phu My Hung dispute: gov’t advisor   2009-12-07 - Thanh Nien

Land use taxes need to be revised to resolve the ongoing dispute between homeowners and developers in Ho Chi Minh City’s Phu My Hung residential area once and for all, a government advisor has said.



The dispute has revolved around who should pay land use taxes, but the real problem is whether the tax rates are reasonable, Dang Hung Vo, senior advisor to the Ministry of Natural Resources and Environment, told Thanh Nien in a recent interview.

“It’s stated in the contracts that home buyers have to pay the land use taxes,” Vo said. “This mechanism had been accepted by both sides for a long time until the recent dispute.”

The dispute broke out early October this year when hundreds of Phu My Hung homeowners in District 7 complained they were being asked to pay land use taxes worth as much as the value of a house as a requirement for getting land use and house titles from the authorities.

They said they felt cheated as they thought they’d already paid land use taxes to the developer, Phu My Hung Corp., when buying the houses.

The homeowners also said it was the fault of the developer who’d failed to give them the titles several years ago when they purchased the property, when land values, and hence land use taxes, were much lower.

Land use taxes in Ho Chi Minh City are calculated by land valuations set by the city administration and the values have typically increased every year. Property valuations this year in Phu My Hung, one of the fastest growing residential areas in the city, have doubled from a year ago.

Vo said at some places the tax rates were VND12 million per square meter versus VND6 million in 2008 and VND3 million in 2007.

The question is whether the rates are reasonable, he said.

“Land values in Phu My Hung increase every year on improved infrastructure built by both the developer and the city government,” Vo said.

“To solve the problem, it is necessary to calculate exactly how much the developer and the city have contributed to the increase in value with their infrastructure (construction). Then the city should only levy land use taxes in accordance with what it has invested.

“If the land use taxes also cover infrastructure built by the developers by themselves, it means homeowners are being asked to pay twice for the same added value,” Vo said.

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