Land prices change frequently and vary greatly depending on location and plot, changes in the relationship, supply and demand in the market as well as changes in socio-economic development conditions in the framework where the plot of land is located. Therefore, having to comply with the Government Land Price Framework, the land price list of localities is always outdated and much lower than the market value of land (According to the assessment report of the Ministry of Natural Resources and Environment, the land price on the Price List of localities is low, equal to about 30-50% of the market land price).
In addition, the use of low land prices in the Price List to calculate land-related financial obligations such as taxes, fees, charges and other financial obligations of land users has caused a loss of a large part of sustainable land revenue. At the same time, this is also the basis for negative corruption to arise when calculating land use fees when allocating land, leasing land and changing land use purposes.
Meanwhile, when the state recovers land, the state stipulates that the land price determined in this case is the specific land price - This is the land price determined based on market information. The regulation itself has created a problem of imbalance between the rights and financial obligations of the land users: When performing financial obligations to the state, the reference is based on the Land Price List to get a low price; When receiving compensation, the reference is based on and applied at a higher land price - according to the market price. Although the regulation stipulates that when determining the compensation land price is based on a land price consistent with the market price, people whose land is recovered are still not satisfied because the actual market price fluctuates frequently, so it is difficult to have a basis for assessing what is appropriate.
Therefore, the regulation of using a unified land price mechanism to implement all land financial relations between the State and land users will ensure equality between rights and obligations in land use relations as well as regulate the increased land value. Because the specific land price is determined according to the market value of the land, it will overcome the loss of land revenue and overcome the situation of people complaining about land prices.
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iii) Third : Supplementing regulations on price registration and specific land price management. One of the contents of land economic management is to manage information on economic relations of each land plot, focusing on transaction prices - land market exchange prices. Therefore, registration of economic relations on land such as price registration during land transactions needs to be identified as mandatory registration information and updated regularly and promptly. To avoid dishonest registration, it is necessary to apply some strong measures such as the mechanism on the State's priority purchase rights for land transactions and land recovery when intentionally violating the Land Law. This regulation will help prevent land users from intentionally declaring low land transfer prices to evade taxes;
Regulations on land price registration of land users after transfer or change in land price of land plots will help the management agency regularly monitor the price of each land plot. Thereby, the management agency will manage the price of land plots of the same type and location in the area. This is also a key solution, deciding the ability to measure, analyze and evaluate changes and differences in increased land prices.
iv) Fourth: Perfecting land valuation methods.
- The current specific land valuation is carried out according to 05 methods (Direct comparison method; Deduction method; Income method; Surplus method and Land price adjustment coefficient method) and is applied in each specific case. In which, the adjustment coefficient method is inappropriate, lacks scientific basis, is subjective and non-market. Therefore, it is necessary to abandon the land price adjustment coefficient method;
- Continue to research and apply international land and real estate valuation and appraisal standards in accordance with the conditions and development of the Vietnamese market. Add regulations on determining value according to land use term. This is the basis and basis for determining land rent when conducting transactions related to land use rights. In the coming time, it is necessary to identify, standardize and quantify basic indicators in land valuation, thereby ensuring the determination of land prices and the application of objective and transparent land valuation methods;
- Research, develop and deploy a number of modern methods in land valuation such as: Building land value zones, forming land price maps and land valuation to support the management process, shorten time and improve efficiency in land valuation to implement decisions to regulate increased land value;
- Supplement regulations on sanctions when determining land prices in the direction of strictly regulating the steps in the process of applying land valuation methods, procedures - steps in determining land prices, clearly defining the responsibilities and roles of land price consulting units and land price determining agencies.
vi) Fifth: Some other relevant regulations and solutions in the process of implementing land price policy regulations:
There should be regulations and reorganization of independent land valuation/appraisal agencies :
- Review the role of the Land Valuation Council in localities. Land valuation is a complex and difficult task that requires experts with specialized expertise. Most of the members of the Council are representatives of
Relevant agencies and departments are not professionals and do not have in-depth knowledge of land valuation, so it is difficult to have accurate opinions during the process of properly performing the appraisal function;
- Establish a land price consultancy and valuation agency independent from the state land price management agency. In particular, the independent land valuation agency is responsible for developing land price lists for localities, determining specific land prices for each plot of land, regularly updating market-oriented information to serve state management agencies in implementing land economic policies. This land valuation agency must take full responsibility for the accuracy and appropriateness of land prices in implementing financial policies, compensation policies for people whose land is recovered if people complain or be responsible for any loss when determining the price for collecting land use fees from the state;
At that time, the establishment of an independent valuation agency is fully responsible for determining land prices, so there is no need for a Valuation Council and the Provincial People's Committee does not have to perform the responsibility of land valuation but directly uses land price information in the price list and land database provided by the valuation agency to make management decisions.
Improving land valuation capacity : There should be training solutions to improve the capacity of the appraisal team and valuers on land prices, invest in building and updating information systems and market databases to serve the land valuation process.
Building and updating multi-purpose land information system (MPLIS):
- Accelerate the process of building a multi-purpose land information system. In particular, pay attention to building and operating a land database to ensure the input of land price information into the land database system; update data in the system annually for each plot of land and have information related to land prices;
- Actively implement the computerization process in building, updating, storing and digitizing land data and information. It is necessary to ensure that all land plots (including land plots that are eligible for land use right certificates and land plots that are not eligible for certificates) must register land information to serve State management.
This is the step that plays the role of providing input information to evaluate land price changes according to the process before, during and after interventions that change land value. From there, we can estimate and regulate the increased land value.
5.2.2.2. Land tax policy
Regulations on tax policies in the land sector are applying a number of taxes such as: Non-agricultural land use tax; Income tax from land use right transfer; Agricultural land use tax, etc. The 2013 Land Law (Article 19) stipulates that the State regulates the value added from land not brought about by investment by land users. However, in actual implementation, the regulation of value added from land through tax instruments has not been implemented, which has created inadequacies causing loss of budget revenue, corruption and land-related complaints. To overcome the above situation, the solutions that need to be implemented are:
i) One is: Supplementing principles on land tax in the Land Law to ensure legal consistency when using land economic tools to regulate increased land value.
In theory, State management of land according to the market mechanism must inevitably use financial tools such as Price and Tax to regulate. The current Land Law only regulates Land Price but does not stipulate principles for Land Tax. Accordingly, it can be seen that there are currently "legal gaps" with principles of land tax in the Land Law. In other words, the Land Law only uses part of the market tools in State management of land economy - using land price tools.
The inclusion of the principled provisions on land tax in the Land Law does not overlap or replace the provisions on land tax in the Land Use Tax Law. The principled provisions on land tax in the Land Law are the bridge that creates consistency and unity between the economic instruments in the Land Law and the specific tax policies in the Land Use Tax Law.
ii) Second : Research and add regulations on VAT regulation between purchase price and sale price between land transactions.
- Practical basis of the proposal: The situation of land speculation when knowing in advance the planning information, information on the implementation of planning, land use investment projects have bought land in advance to speculate, waiting for the planning to change or the projects to be implemented, causing land prices to increase for profit. These actions have distorted the land market, pushing land prices up, not in line with the market value of land.
- Proposed principle: The land value regulation tax will be based on the tax rate and the value of the land. In which, the tax rate will be based on the land user's land occupation time. Accordingly, progressive tax will be levied on the increased difference between the purchase price and the sale price of the land depending on the length of time between two transactions: when the time between
The shorter the two transactions, the higher the regulatory tax rate to regulate the value added concentrated in the budget and limit the speculative land holding.
- Content of the proposal: Implement tax collection on the increased difference between the purchase price and the sale price in land transactions, based on the time between two transactions: the shorter the time between two transactions, the higher the tax rate and the tax rate decreases gradually according to the length of time between two transactions.
Thus, with this tax mechanism, when the land is put into transaction, the State will regulate the increased value of the land due to changes in planning, the development of socio-economic conditions and infrastructure development. In addition, this policy will have the effect of limiting land speculation when it is possible to know in advance the planning information, information on the implementation of investment projects that have purchased land in advance to speculate, waiting for the planning to change or the projects being implemented to increase land prices for profit. Thereby, contributing to price stabilization and the health of the land - real estate market, creating favorable access to land for those who really need to use land.
iii) Third : Implement the amendment of the tax base of the current land use tax in the direction that: The tax base for land use tax needs to be based on land value and the increased land value due to changes in land conditions.
We know that urban infrastructure investment projects cost a lot of money from the state budget, people who are subject to clearance must relocate to live elsewhere and face many difficulties due to changes in their lives, while people living next to the project enjoy the entire added value of the land. This situation not only creates inequality between people who have to relocate to implement the project and those who do not have to relocate, but also between those who relocate later and those who relocate earlier in different phases of the project.
Accordingly, to regulate the increased value, it is necessary to apply land use tax that increases according to the increase in the value of the land plot occupied by the user to regulate the differential land rent value I brought about by the state's investment in infrastructure development, causing the value of adjacent plots of land to increase. The annual tax increase that the land user has not paid may be recorded as a debt for land financial obligations, until the land transfer transactions are carried out in the future, which will have to be paid with the proceeds from land transfer.
In cases where land users are unable to effectively exploit valuable land in prime locations with high profitability, they are forced to transfer the land to effective land users to generate revenue to pay land taxes. This is an economic measure to encourage people to put the land into effective use.
In the long term, research, develop and promulgate the Law on Property Tax (with provisions on real estate tax) to replace the current land use tax (agricultural land use tax and non-agricultural land use tax).
5.2.2.3. Other relevant land finance policies
a. Land use fee collection policy:
It is necessary to apply annual land lease payment for production and business land, not one-time land lease payment for the entire land lease period. In particular, it is necessary to innovate the mechanism for collecting land use fees in the direction of determining revenues based on the profitability of the land plot in cases of land use purpose conversion. In addition, it is necessary to classify (subdivide) non-agricultural production and business land according to the purpose of industrial production, land for commercial premises, services... and when changing the purpose of use between these types of land, there is a difference in financial obligations, it is necessary to pay additional state budget, in order to use land effectively and regulate revenue sources for the budget.
In the coming time, it is necessary to innovate the land use fee collection policy in the direction of: Only applying the form of annual land rent payment corresponding to the value brought from the land for land use activities. For other forms of land use, apply the tax mechanism for land that has been allocated stably and permanently to land users. This is a stable source of revenue that effectively regulates land use behavior. Because this collection method has the effect of reducing the pressure on investment capital to pay land rent once when starting to invest in business. At the same time, it overcomes the situation where investors take advantage of the one-time payment mechanism with low land prices to make profits through sub-leasing or mortgaging banks to mobilize capital more than the value of land rent paid when land prices increase.
b. Policy on auction and bidding related to land use rights in infrastructure investment projects and investment projects with land use:
In principle, land-related auction and bidding policies aim to exploit and recover land value from the advantages brought about by infrastructure investment and development project investment. The following measures need to be implemented:
Create land funds and conduct auctions for adjacent land funds in infrastructure development investment projects:
Infrastructure investment projects change access conditions for land adjacent to the project, forming differential rent for land adjacent to the project. If the adjacent land is not exploited centrally, on the one hand, the advantages will be dispersed due to the division of each household using the land, and at the same time, creating inequality between those who have to relocate and those who stay to enjoy.
Accordingly, in order to maximize the spillover effects of investment projects and regulate the increased land value from infrastructure investment projects, it is necessary to calculate the recovery of the entire land area within the spillover effect area for synchronous re-planning, creating resettlement sites for local people, creating clean land funds for auction to select the most effective exploitation activities of the advantages brought by the projects and investment projects.
Practices in Vietnam in recent times have shown that the mechanism of creating land funds through double clearance is a way to clear additional land areas on both sides of the road that are expected to be recovered to build urban traffic infrastructure works in some localities, which has shown some advantages in mobilizing financial resources for urban development. However, this mechanism will be suitable when building new routes or renovating urban construction in areas with open land funds. Therefore, instead of just recovering and clearing enough land for road construction, the state will clear large areas on both sides along the newly formed road, creating a reserve land fund. This is a part of the land fund with high added value because it has great commercial advantages. This land fund can be used to reserve for future road openings, or this land fund can be auctioned to create financial resources for the investment in that infrastructure project.
In the coming time, the implementation and replication of this mechanism may not be suitable for the context of increasingly scarce urban land funds. Accordingly, it is necessary to study and apply a number of fee tools related to the right to develop space or infrastructure usage fees in the surrounding areas of infrastructure development investment projects. In addition, in the surrounding urban areas, after the infrastructure investment project is completed, when granting investment licenses to build real estate works on the land, it is possible to consider international experience in regulations requiring private landowners/real estate developers to pay infrastructure usage/connection fees for that area. This is considered a usage fee to maintain and renovate the infrastructure of that area or to be arranged by local authorities to build auxiliary infrastructure works in the area/locality.
For investment projects with land use rights:
For investment projects with land use, agricultural land is recovered, site clearance compensation is paid and land use fees are paid at low prices, but when the project is implemented, the land use purpose is changed to non-agricultural business land, so the land price increases many times due to the change in land use purpose, not due to investment. In addition, when the project is implemented, many adjacent infrastructure works are also invested in and developed, changing the advantages and increasing the land value. Thus, the entire increased land value is falling into the hands of land users (investors with projects), causing a loss of revenue.
The reason for the above situation is that the determination of the land use fee that investors must pay is not commensurate with the actual value of the land used by the project.
In addition, in reality, when implementing projects, there is always a huge price difference between the land price before the project is implemented and the land price after the project is completed and put into operation, which is the added value of the land after project development.
Thus, in order to regulate the added value of land when implementing projects with land use rights, it is necessary to determine the mechanism for measuring the difference in land prices between before and after project implementation. This is quite complicated, because determining land prices after project implementation (currently not yet invested) is based on the development assumptions of the project and the development situation of the land area. Accordingly, the thesis proposes to determine land prices of projects with land use rights through bidding for land use rights projects and land valuation after project completion as follows:
+ Conduct bidding for projects with land use rights to select investors to implement the project, with estimated unit prices for land types after the project is completed (based on development assumptions), and the minimum land use rights amount that investors commit to pay to the state budget to implement the project;
+ After the project is completed, the State shall preside over the re-determination of land prices (specific land valuation will be conducted by an independent land valuation agency) of the project according to the market value at the time the project begins operations and the price of land after completion of the same type adjacent to the project. This step aims to determine the increased land value after the project is completed without being recreated by the investor - This is the value that must be regulated into the state budget.
c. Land compensation policy when the state reclaims land:
In principle, the content of the policy provisions related to land compensation when the State acquires land plays a role as a tool to regulate the increased land value before and after land acquisition for land users. Accordingly, land users must be equal when exercising their rights and obligations regarding land. This means that when land users have fulfilled their financial obligations regarding land, they will enjoy equivalent financial benefits regarding land when the State acquires land.
Therefore, the land compensation price must be based on the specific land price of each land plot as the basis for calculating tax and recorded in the land plot database. The tax price has been stipulated as the market value of the land, so the compensation price will be equivalent to the market price. In case at the time of recovery, the land price on the market fluctuates abnormally, the compensation price will be calculated according to the market price at the time of recovery, but the part