Whether or not to tax property, that’s the debate

Potential homebuyers check models of housing projects at a real estate agency in Shanghai in April. [Photo by WANG RONGJIANG/FOR CHINA DAILY]

A recent Xinhua report discussed house prices and the property tax, sparking speculation that a new tax could be imposed to curb any skyrocketing house prices in some cities.

At the end of December, a report from the Chinese Academy of Social Sciences suggested that new accusations could be part of the 14th Five-Year Plan (2021-25).

For more than a decade, property taxes have been crying wolf in China. But now, after a year of pandemic-related ups and downs in the housing sector, the question of whether or not there would be a new property tax has gained enormous resistance in public discussions.

The Xinhua report mentioned possible strict measures to cool the overheated domestic market. He also discussed a series of suggestions to defend the principle that “housing is for living, not for speculation”. One view expressed was that a property tax levy in a reasonable and scientific way could help.

The CASS report, according to Economic Daily, suggested that cities where house prices tended to overheat may want to test a new solution in the form of a property tax during the period of the 14th Five-Year Plan. In line with the Central Economic Work Conference’s focus on solving housing problems in large cities, the report says systematic strategies should be adopted, including the imposition of property taxes.

James Macdonald, Chief and Senior Director of Savills China Research, said: “The government continues to talk about long-term mechanisms to control the real estate market and reduce the reliance of local authorities on land sales by diversifying sources. tax and recurring revenue streams.

“Therefore, property taxes are one of the natural choices. In addition, the new tax can also ease the tax burden on local governments in improving social services, fiscal stimulus and infrastructure spending.”

Chen Sheng, Chairman of China Real Estate Data Academy, said, “It is very likely that property tax will enter the legislative process during the period of the 14th Five-Year Plan, and it will probably be part of daily life in a few years. “

The property tax is one of the few taxes that has not yet completed the legal process necessary for its implementation, Chen said.

Regardless of the planned new taxation, people who live in their properties don’t have to worry too much, as the property tax would only help regulate the housing market and aims to curb speculation, said the experts.

In 2011, Shanghai and Chongqing became the only two cities to levy a property tax. In Shanghai, the tax is collected only from families with a housing area of ​​more than 60 square meters per person, and it is taxed at a rate of 0.4% or 0.6% of the total real estate price per person. year, depending on the price of the apartment per square meter. .

In Chongqing, the tax, which is levied on an experimental basis, is more focused on controlling speculation on investments in high-end properties, with a rate set between 0.5% and 1.2% of the price of the property. real estate per year.

However, the property tax in other cities is likely to be completely different from what is levied in Chongqing and Shanghai, in terms of tax base and collection, as it involves all relevant government divisions from legislation to implementation. implemented, experts said.

Esther L. Steinbach

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