Rich Homeowners to be Taxed to Help the Poor
Rich Homeowners to be Taxed to Help the Poor
Following news that tax on luxury housing in Kazakstan is to rise, NBCentralAsia experts say the tax hike could provide welcome extra revenue to subsidise cheap housing programmes, but warn that it could hit those people to whom the government has allocated housing in wealthy areas.
Speaking at a July 4 press conference, Kazak president Nursultan Nazarbaev is quoted by Kazak news agencies as saying, “We are now going to raise taxes on the construction of luxury homes so that people can buy less expensive housing.”
However, NBCentralAsia’s analysts have clarified this, explaining that the plan is in fact to increase the tax payable by luxury home owners, not by those who build such housing.
The construction of top-end property has dominated the market for the past few years and even though most people cannot afford such housing, demand has held up with the popularity of large mortgages.
At the moment, housing in Almaty, the country’s second city, costs 3,000 to 3,500 US dollars per square metre.
Kanat Berentaev, an expert with the Centre for the Analysis of Social Problems, predicts that the owners of more than one luxury housing unit will find it unprofitable to pay large amounts of tax, so they will start putting properties on the market, increasing the overall supply and thus depressing prices.
“This [new taxation] is not going to deter people from buying properties,” he said. “It will remain as it is – those who can afford it will buy.
“It is those who have several apartments who will be at a disadvantage. They’ll have to… rent them out or get rid of them.”
Some analysts are predicting that the tax will have a beneficial effect as an instrument for wealth redistribution.
Gulnur Rakhmatullina, an economic analyst and senior fellow at the Kazakhstan Institute for Strategic Studies, says the tax revenue could be invested in social programmes, including the construction of affordable homes.
However, Berentaev warns that the small group of people who are not well-off but were able to buy luxury apartments on preferential terms subsidised by government could suffer.
“For example, take the pensioners to whom the government gave apartments in central Almaty,” he said. “They may be forced to sell up and move to cheaper areas if they are taxed under the new rules.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
Speaking at a July 4 press conference, Kazak president Nursultan Nazarbaev is quoted by Kazak news agencies as saying, “We are now going to raise taxes on the construction of luxury homes so that people can buy less expensive housing.”
However, NBCentralAsia’s analysts have clarified this, explaining that the plan is in fact to increase the tax payable by luxury home owners, not by those who build such housing.
The construction of top-end property has dominated the market for the past few years and even though most people cannot afford such housing, demand has held up with the popularity of large mortgages.
At the moment, housing in Almaty, the country’s second city, costs 3,000 to 3,500 US dollars per square metre.
Kanat Berentaev, an expert with the Centre for the Analysis of Social Problems, predicts that the owners of more than one luxury housing unit will find it unprofitable to pay large amounts of tax, so they will start putting properties on the market, increasing the overall supply and thus depressing prices.
“This [new taxation] is not going to deter people from buying properties,” he said. “It will remain as it is – those who can afford it will buy.
“It is those who have several apartments who will be at a disadvantage. They’ll have to… rent them out or get rid of them.”
Some analysts are predicting that the tax will have a beneficial effect as an instrument for wealth redistribution.
Gulnur Rakhmatullina, an economic analyst and senior fellow at the Kazakhstan Institute for Strategic Studies, says the tax revenue could be invested in social programmes, including the construction of affordable homes.
However, Berentaev warns that the small group of people who are not well-off but were able to buy luxury apartments on preferential terms subsidised by government could suffer.
“For example, take the pensioners to whom the government gave apartments in central Almaty,” he said. “They may be forced to sell up and move to cheaper areas if they are taxed under the new rules.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
