Land revenue is high, don't be too happy

Land use fee collection in the first half of this year skyrocketed, reaching more than VND243,000 billion, 2.6 times higher than the same period last year, but many experts and businesses said there was no need to be too happy, because this is a one-time collection with many potential risks.

Some businesses say that high land use fees will make it difficult to control housing prices.

The sharp increase in land revenue in the first half of this year also made it more difficult for businesses to access land. Even businesses with projects that have been suspended for decades, now with legal obstacles removed, find it difficult to implement their projects because land use fees and land taxes have increased dozens of times.

Why is land use fees skyrocketing?

Prof. Dr. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment , said that the increase in land use fees in the first half of this year was due to the increase in the land price list. When the land price list is pushed up to the market price, of course, the revenue from land use will increase. In particular, the locality with the highest land price list is Ho Chi Minh City, the land price list is equivalent to 70% of the market price.

"Vietnam has long been among the world's leading countries in terms of land revenue. Even when land prices were low as in previous years, land revenue in our country was approximately 3% of GDP, on par with developed countries in the world such as the US and UK, and higher than Japan and South Korea," Mr. Vo added.

According to Mr. Do Thien Anh Tuan - lecturer at the Fulbright School of Public Policy and Management, the fact that a series of localities are accelerating land auctions, especially in areas with high economic value such as urban belts, industrial parks or areas with newly completed infrastructure, also contributes to increasing revenue from land.

Besides, the recovery of the real estate market from the end of 2024 to 2025 and a series of market-clearing policies have begun to take effect.

"Speeding up project approval, completing planning and improving transparency in the process of converting land use purposes has helped transactions take place more smoothly, thereby creating a large revenue stream for the budget from land use fees," Mr. Tuan added.

However, according to Mr. Nguyen Quoc Hiep - Chairman of GP Invest, although budget revenue has increased sharply thanks to increased land use fees, state management agencies need to consider how the sudden increase in land prices in the first half of this year is affecting investment, production and business.

"Land use fee revenue skyrocketed in the first half of this year because many projects have been implemented for a long time, and at the beginning of this year, there was a new land price list so they had to do it. In Hanoi, there were projects that had been stuck for decades and could not be implemented until the beginning of this year, when the obstacles were cleared so that businesses could continue to implement them," said Mr. Hiep.

Representatives of several other businesses also said that the sharp increase in land use fees in the first half of this year is not a good sign for the business investment environment, especially real estate investment.

Land auctions contribute to increasing land use fees in the first half of 2025 - Photo: B.NGOC

Concerns about land use fees pushing up housing prices

Besides the positive impact of increased budget revenue, according to Mr. Nguyen Quoc Hiep, high land prices also bring many negative consequences. That is, housing prices will increase because all input costs are included in the price of the house and no investor will lose money. However, reality also shows that not all investors can sell houses by raising the price.

"The price of apartments is already at 70 - 80 million VND/ ^m2 , which is already very high. If it is pushed up to over 100 million VND/ ^m2 , who will buy it? Housing prices are beyond the affordability of workers and wage earners.

Even those who have money to buy houses for investment, speculation, and accept to buy at high prices waiting for prices to increase, when the market slows down, they will not continue to invest anymore," Mr. Hiep expressed concern.

Meanwhile, Mr. NQK, an investor in Hanoi, said that at this time, many investors are considering because housing prices have increased very high, market demand is gradually decreasing. At some point, the market's consumption power will no longer exist, the market will stop. At that time, even though they have paid land use fees, investors will not be able to continue investing in the project because they cannot consume the products.

According to Mr. NQK, the Ministry of Agriculture and Rural Development is planning to amend the 2024 Land Law in the direction of returning to the land price table and land use coefficient as in the 2014 Land Law. Accordingly, the land price frame will remain the same for 5 years and will be adjusted by the land use coefficient.

Therefore, there needs to be more specific regulations on land use coefficients, we leave it to the provinces to determine, but there needs to be regulations on building land use coefficients to avoid arbitrary coefficients. Because investors also need to visualize what the project land price will be in order to make estimates and calculate output, Mr. NQK added.

In addition, many businesses expressed concerns that according to the Land Law, the land price list will take effect from January 1, 2026, but up to this point, many localities have not yet developed a new land price list, and are still calculating according to the current land price list. Therefore, it is necessary to calculate to promptly issue a new land price list in early 2026.

According to representatives of some businesses, land prices are a burning issue in most projects. "If localities follow Decree 71, there will be many problems in valuing project land, and it will take 1-2 years to complete the valuation of a project. Therefore, the first issue that needs attention when amending the Land Law is to amend the land valuation method," said a business.

Source: Ministry of Finance, data: LE THANH - Graphics: TUAN ANH

* Mr. Do Thien Anh Tuan (Lecturer at Fulbright School of Public Policy and Management):

Pushing up land prices could hamper production

Chasing land use fees can push localities into selling land for money, pushing up land prices through auctions, distorting the market, increasing investment costs and hindering production.

This could stifle economic competitiveness, reducing the attractiveness of investment in value-added manufacturing and services.

Land revenue must be more sustainable

From the perspective of a land expert, Mr. Dang Hung Vo believes that the land price list should be close to the market but the State must have appropriate financial policies on land. In particular, land policies must control housing prices as many countries are applying.

"The way other countries solve this is that investors only have to pay 30% of the land use fee, not the entire amount right from the start like us. Only when the facility is operational will the State calculate the tax. That is, the remaining 70% is collected as a tax on the increased land value when the facility is operational," said Mr. Vo.

Meanwhile, Mr. Do Thien Anh Tuan said that it is necessary to conduct a comprehensive reform of land and real estate revenue policies, not only to create a sustainable revenue system for the budget but also to reasonably regulate income, ensure social equity and develop a healthy real estate market.

According to Mr. Tuan, it is necessary to gradually eliminate the so-called "collection of money" and replace it with a property tax system. Specifically, property tax should be designed according to a progressive schedule, meaning the more real estate a person owns, or the more valuable the real estate, the higher the tax rate.

This is not only to increase revenue but more importantly to regulate the additional income from land - a form of passive income that is not being taxed as appropriately as income from labor or production and business.

"The core function of property tax is redistribution, that is, taking a portion of the benefits from the group that owns a lot of assets to redistribute. Here, the tax is not aimed at lowering housing prices but at creating resources to support disadvantaged groups to access housing, develop social housing, renovate poor urban areas, or invest in public infrastructure to serve the majority.

Along with property tax, we should also decisively apply progressive income tax from real estate transfers to regulate income and regulate speculative behavior," Mr. Tuan further analyzed.

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LE THANH - BAO NGOC

Source: https://tuoitre.vn/boi-thu-tien-dat-khong-voi-mung-20250813224319634.htm