Vacancy Tax May End Up Hurting Buyers: Economist

An economist said on Tuesday that he is worried developers will pass any tax they are forced to pay on vacant flats on to buyers, raising prices further.

"As long as the demand keeps at a very high level, when you impose the vacancy tax, I'm afraid this will have a certain negative impact, the developers will pass part of the tax to the buyers," said Andy Kwan, the Director of ACE Centre for Business and Economic Research.

Kwan was speaking on Tuesday after attending an RTHK discussion on the topic with Civic Party lawmaker Dennis Kwok.

Kwok has been calling for a vacancy tax as a means to force developers to release completed flats they are hoarding. Government figures show there were about 9,000 flats left empty between last December and March this year.

The legal sector lawmaker said the vacancy tax must be high enough to hurt developers and he dismissed the claim that such a levy will affect property prices.

"Our proposal is that it should be increased on an annual basis. So if you sit on it for one year, you'll pay a certain percentage, and then next year it could be doubled, so on and so forth," Kwok said.

He told RTHK's Janice Wong that residential properties are not commercial commodities and have a social value. So if you allow developers to sit on these empty flats, society will end up paying a huge social cost, he warned.

Financial Secretary Paul Chan told lawmakers on Monday that the government is nearing a decision on the matter to help boost the city's housing supply.