The Myanmar Government – along with the regions and states – is set to impose a new ‘property tax’ to curb skyrocketing land prices, a minister said.
The current property taxation system works through a levy collected on all residents living on land or in a building according to a resident’s location and income. Regional and State governments currently levy the tax for use in regional developments.
When a property changes hands in Myanmar, ownership must be registered with the Urban and Land Management Department and tax paid to the City Development Committee. However, some real-estate agencies do not make legal contracts, instead they buy lands with ‘general power’ and ‘special power’ –which allows for sale without contract – the resulting failure to collect tax further inflating land values.
“Some businessmen bought lots of lands. So, we will study the international taxation system and techniques to control those who trade lands and manipulate the land price,” U Soe Maung, Union Minister for the President’s Office, said.
“We will implement this system in discussion with regional and state parliament members, businessmen and authorities from relevant regions and states,” he added.
Reforms to the 2012 Farmland Law failed to address this problem, adding taxation on: selling, renting, pawning, exchanging and transferring of farmland. But did not include the collection of tax on property sales.
To control the land prices, government set the land price per foot in 2013. Prices for downtown townships in Yangon reached K150,000 ($150) to K300,000 (300), but actual prices are much higher, more than double in some rural areas of Yangon.
The Department of Internal Revenues plans to revise land price per foot in the Yangon area to bring official land prices in line with current prices and halt speculative buying.
However, Dr Nyo Nyo Thin, former professor of law and parliament member, cautioned against government intervention saying price hikes could not be avoided through simple law enforcement.
“We need to enact suitable laws and also watch by forming the relevant committees.” he said.
“It is not easy to take immediate control over the land price. To control the land prices, the government must explore more virgin and vacant sites,” Daw Yi Yi Myin, economist at Yangon Institute of Economics, said.
“Now, the easiest way to make a profit is through real estate. This is due to the lack of a strong financial market,” she added.
The rise in the price of land has caused increases in the price of goods due to high investment costs for local and foreign manufacturers, difficulties for foreign investment due to the high prices of land, and difficulties for locals in owning or possessing land, member of the Parliament Phyo Min Thein said.