Property taxes simplified

The government plans to abolish a host of property taxes and replace them with a single ownership tax whose revenue will be passed on to local authorities. In this way, the government hopes both to provide a boost to the real estate market and make a gesture that will be appreciated by local voters. This proposal surfaced some months before the municipal and prefectural elections in which the ruling Socialists are expected to take a drubbing. Commentators have accused the government of a blatantly political move designed to prop up pro-government candidates. The government has long studied simplification of taxes on property, with the intention of helping the fledgling real estate investment market get on its feet. The ownership tax is a new proposal, and the committee of experts which has proposed it says it will more than make up for revenue lost with the abolition of other taxes, such as the tax on large property, the special property levy and the electrification tax. Also scheduled for abolition is the property transfer tax, considered by would-be investors as one of the main impediments to a modern property market. The ownership tax will be paid annually and will have a minimum rate of at least 0.2 percent of the property’s value. It will also be progressive, although details such as the actual tax brackets have yet to be worked out. The committee of experts is in favor of maintaining the inheritance, grant and parental gift taxes, but with a single rate instead of the existing four. The government is also considering the imposition of VAT on construction, something which, according to one major construction firm manager, will encourage large firms to enter apartment construction and will «render property a more easily tradeable asset.»