Pro-business Lawmakers Condemn Vacant Flats Tax

Pro-business lawmakers on Monday accused the government of undermining Hong Kong's free market economy with its plan to slap a vacancy tax on new flats left vacant for a year or more.

In a bid to boost home supply, the government intends to charge developers a tax equal to double a flat's annual rateable value if it is still idle a year after an occupation permit was issued.

Figures show there are currently about 9,000 such homes.

But at a meeting of Legco's housing panel, pro-business lawmakers railed against the proposal.

The Liberal Party's Shiu Ka-fai said the measure goes against Hong Kong's status as a free market economy, while Lo Wai-kwok from the Business and Professionals Alliance warned that developers may shift the cost of the tax onto homebuyers.

Meanwhile Abraham Shek, who represents the real-estate sector, accused officials of having no understanding of what it takes to sell a flat.

"We have some flats up on The Peak or even in Mid-Levels that we have been trying to sell for nearly two years ... it is not like the government thinks – that they are selling like hotcakes – it doesn't work that way," Shek said.

Responding to the concerns, Housing Secretary Frank Chan said the administration just wants to ensure that completed flats go on the market as soon as possible, and it isn't looking to make an enemy of developers.

Other lawmakers were concerned about possible loopholes. The Civic Party's Kwok Ka-ki suggested that developers could try to avoid the tax by not applying for an occupation permit.

The panel also passed a non-binding motion urging the government to study the idea of taxing vacant second-hand flats owned by non-local people.