China revives efforts to roll out property tax to rein in runaway home prices

25 May, 2021 04:19
source: Singularity Financial

Singularity Financial Hong Kong May 25, 2021 – China is accelerating long-discussed plans to roll out a nationwide property tax. Experts say such a tax could be tested by the end of this year in some first- and second-tier cities that have hot real estate markets, most likely Shenzhen and the southern island province Hainan.

The Ministry of Finance said it had attended a high-level meeting with the Budget Commission of the Standing Committee of the National People’s Congress, the Housing Ministry and the State Taxation Administration to solicit opinions from city representatives, experts and scholars on a pilot scheme for implementing the real estate tax.

It did not disclose more details about the meeting in a statement issued late on Tuesday on its website. There had been no official mention of the plan over the last two years.

A joint symposium on Tuesday, which included the Ministry of Finance and Ministry of Housing and Urban-Rural Development, heard opinions from municipal officials and experts about the current real estate tax reform pilot programme, further increasing speculation on the outlook for property taxation in more Chinese cities.

“There’s no doubt that it will be levied,” said Cai Chang, a tax professor at Central University of Finance and Economics. “The only issue is how.”

The southern tech hub of Shenzhen should be the first candidate for the pilot programme, due to its runaway home prices in a heavily speculated market, according to the state-run newspaper, citing a researcher with China’s top think tank, the Chinese Academy of Social Sciences (CASS).

The tax scheme roll-out in the balmy southern island of Hainan would be much easier with its largely regulated property market meaning less resistance for implementation, another expert said.

Beijing’s proposed taxation on property owners has received strong opposition for the past decade due to the lack of availability of housing information systems as well as questions about the legitimacy of such a move, as the land which a house is built on is already owned by the state.