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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: fatty who wrote (6336)	10/28/2002 1:49:44 PM
From: Don Green	Respond to of 306849

Residential Land Prices Drop 12%; Property Taxes May Rise Tuesday, October 29, 2002 TOKYO (Nikkei)--The official residential land prices calculated as of July 1 and used as a benchmark for assessing property taxes fell an average 12% from a year earlier and 31% from three years previously, the Home Affairs Ministry announced Monday. Despite the broad decline in benchmark land prices, business circles are increasingly concerned that some homeowners may see tax increases, not declines, because of a complicated formula intended to smooth out sharp fluctuations in property taxes. Calls for measures to lighten the tax burden are likely to be one of the focal points of debate as the ruling coalition takes up annual tax system revisions toward the end of the year. The benchmark land prices calculated by the Home Affairs Ministry are based on the most expensive land prices in the capital cities of prefectures nationwide. The latest prices will be closely scrutinized because they form the basis for a triennial tax reassessment in fiscal 2003. Land prices recorded year-on-year upturns in only three localities: the Chuo Ward of Tokyo, the Kita Ward of Osaka and the Chuo Ward of Fukuoaka. In contrast, prices showed double-digit declines in 28 prefectures. The city of Mito, for example, was hit with a 27.3% drop, while Fukui registered a 23.7% decline. Although municipal property taxes are pegged to these official land prices, Japan adopted a formula in response to the soaring land prices during the bubble economy that works to smooth out sharp fluctuations. As an unintended consequence, however, some homeowners are likely to face higher tax bills despite the land price decline. The formula sets the actual taxable base of a property at 60-70% of the benchmark land price. If the taxable base from the prior fiscal year is less than 60% of the new benchmark price, the new taxable base is pushed up in increments to more than 60% of the benchmark price. This can lead to a tax increase in cases in which the taxable base of properties failed to keep pace with rising land prices in prior years. Business leaders are upset at the possibility of tax increases, and they are also complaining that the 70% ceiling for the taxable base is too high. Calls are mounting to lower the ceiling to the 50% level. But the Home Affairs Ministry is cool to the idea of lightening the property tax burden because any reduction would represent a harsh blow to revenue-strapped municipalities. The tax accounts for 45% of municipal tax revenues. (The Nihon Keizai Shimbun Tuesday morning edition)