2
WEDNESDAY, MAY 11, 1994
EFFECTIVE
AGAINST THIS BACKGROUND, ANY CAPITAL GAINS TAX WOULD HAVE TO BE SUFFICIENTLY PUNITIVE IN ORDER TO PROVIDE DETERRENT AGAINST PROPERTY SPECULATION.
UNDERMINE
AN
ADDITIONAL BUT A PUNITIVE CAPITAL GAINS AND OVERSEAS TAX WOULD SEND A STRONG NEGATIVE SIGNAL TO BOTH LOCAL INVESTORS ACROSS THE BOARD. THE PROSPECT OF HAVING THE TAX AS A BAND- AID SOLUTION TO ADDRESS A TEMPORARY PROBLEM WOULD SERIOUSLY TWO MUCH-VAUNTED PRINCIPLES OF OUR TAXATION SYSTEM
TWICE INVESTORS WOULD THINK ITS PREDICTABILITY. CAPITAL TO HONG KONG ONCE WE GOT A REPUTATION FOR INTRODUCING STOP-GAP THEM WHEN FISCAL MEASURES TO TACKLE SOCIAL PROBLEMS, AND ABOLISHING THE NEED FOR THEM WENT AWAY OR POLITICAL WHIMS TURNED AGAINST THEM,
DR
ITS STABILITY AND ABOUT COMMITTING
ECONOMICS,
IN
HAVE PRICES. PROPERTY
INFORMATION THE AN ARTICLE DEPARTMENT OF HONG KONG AND
UNIVERSITY
COMMENTED HUANG
THAT A FEW DEVELOPED COUNTRIES INTRODUCED CAPITAL GAINS TAX TO CURB A SHARP RISE IN HE MENTIONED JAPAN, IN PARTICULAR. ACCORDING TO MY EFFECT. CAPITAL GAINS TAX HAS CAUSED DEVASTATING WRITTEN BY PROFESSOR KEITH MCKINNELL, THE HEAD OF THE THE DEPARTMENT
IN THE UNIVERSITY OF OF SURVEYING
OF PROFESSOR
MIYAU, TAKAHIRO
PROFESSOR OF
AND I CHUBUKA IN JAPAN, THEY WROTE AN ARTICLE EXACTLY A MONTH AGO,
TO DISCOURAGE 1991, CAPITAL GAINS TAX WAS RAISED SHARPLY
LAND NATIONAL CUMULATING IN 1992 WITH A PROPERTY TRANSACTION,
THESE MEASURES HOLDING TAX,
THE SO CALLED LAND VALUE TAX IN JAPAN.
ONCE BOOMING TO STIFLE JAPAN'S WERE
PROPERTY SUFFICIENTLY STRONG MARKET. BUT THEY DID MUCH MORE THAN THAT IN THAT THE WORSE DAMAGE FELT ON A BALANCED SHEET OF MOST FINANCIAL INSTITUTIONS AND CORPORATIONS. THIS POLICY INDUCED COLLAPSE OF THE PROPERTY MARKET THEREFORE SEVERELY AFFECTED THE OVERALL ECONOMY, LEADING TO THE RECESSION IN JAPAN'S POST-WAR HISTORY.
QUOTE "IN
11
NEW
BUSINESS
WAS
HAS
WORSE
REACTION OF THE MARKET
ADVANCE THE MUCH AS WE WISH, IT IS NOT POSSIBLE TO GAUGE IN
MARKET ECONOMY IN A FREE
LIKE REACTION OF THE MARKET TO THE TAX.
AN IMBALANCE IN OURS, THE STEEP RISE IN PROPERTY PRICES REFLECTS
HAS BEEN SUPPLY AND DEMAND, IN ADDITION TO INVESTMENT DEMAND WHICH
INFLUX BUOYED UP IN RECENT MONTHS BY LOCAL INVESTMENT CAPITAL AND THE
FROM ASPIRING HOME- OF FOREIGN FUNDS, THERE IS A SUSTAINED DEMAND
COMBINATION OWNERS LOCALLY. THIS END-USER DEMAND HAS EMERGED FROM A
A
IN
AND INCLUDING
HOUSEHOLD NUMBERS OF FACTORS,
STEADY GROWTH
LOW INTEREST HOUSEHOLD INCOME, ASPIRATIONS FOR HOME OWNERSHIP AND A RATE RELATIVE TO INFLATION.
FOR
THE
HAD
THE
DEMAND FOR NEW PRIVATE AN EARLIER STUDY REVEALS THAT THE RESIDENTIAL FLATS IS MORE SENSITIVE TO THE HOUSEHOLD INCOMB THAN,
SO IF WE DID NOT GET INSTANCE, THE MORTGAGE RATE OR FLAT PRICES. TAX RATE RIGHT AND ASSUMING THAT SUPPLY REMAINED TIGHT BEFORE WE AN EXPANDED HOUSING SUPPLY, WE MIGHT END UP PUSHING PRICES UP AS BURDEN OF THE NEW TAX WAS PASSED ONTO END-USERS.
/FURTHERMORE, A