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Chongqing to lead way on property tax
By Pan Xiaoyi |
January 10, 2011, Monday
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Print Edition
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SOUTHWEST China's Chongqing Municipality could be one of the first Chinese cities to impose a housing property tax, if an ongoing local parliamentary session approves a government work report delivered by Mayor Huang Qifan.
Members of the municipal people's congress were reviewing the government report that looks to impose a tax on high-end houses at their meeting yesterday, Xinhua news agency reported.
However, the report does not clearly state what kind of high-end houses would be taxed.
Sources with the municipal government told Xinhua that it is rushing to draft a detailed regulation which is likely to be made public in the first quarter, if it is endorsed by the local legislature.
Local governments in many Chinese cities including Shanghai and Beijing are deliberating imposing a housing property tax to reign in wildly inflated property prices.
The property tax is expected to spread nationwide after trial programs in Shanghai and Chongqing.
However, market watchers have expressed doubt as to whether higher costs can bring down prices and are concerned about the increasing burden on cash-strapped households.
"The property tax cannot tackle soaring home prices," said Zhang Dawei, a researcher with Centaline China. "The main reasons lie in tight market supply and excessive money supply."
Land supply in China increased 18 percent year on year to 4.28 billion square meters in 2010. In comparison, land sales soared 70 percent from a year earlier last year to 2.7 trillion yuan (US$40.72 billion), according to the Ministry of Land and Resources.
Land sales have been surging in China since 2004 when a new mechanism was introduced. Most land parcels offered since then were auctioned and that was the major reason behind skyrocketing prices, industry analysts said.
Between 1992 and 2003, land sales generated more than 1 trillion yuan whereas in 2007 alone they yielded 1.3 trillion yuan, according to earlier statistics released by the ministry.
Increases in home prices have far outpaced those of incomes and analysts are worried a property tax will dig deeper into households' pockets.
"The property tax could easily be transferred to those who really need new homes and add a tax burden on those who have already been struggling with high tax schemes in the country," said Li Xiao, a real estate researcher in Shanghai.
Members of the municipal people's congress were reviewing the government report that looks to impose a tax on high-end houses at their meeting yesterday, Xinhua news agency reported.
However, the report does not clearly state what kind of high-end houses would be taxed.
Sources with the municipal government told Xinhua that it is rushing to draft a detailed regulation which is likely to be made public in the first quarter, if it is endorsed by the local legislature.
Local governments in many Chinese cities including Shanghai and Beijing are deliberating imposing a housing property tax to reign in wildly inflated property prices.
The property tax is expected to spread nationwide after trial programs in Shanghai and Chongqing.
However, market watchers have expressed doubt as to whether higher costs can bring down prices and are concerned about the increasing burden on cash-strapped households.
"The property tax cannot tackle soaring home prices," said Zhang Dawei, a researcher with Centaline China. "The main reasons lie in tight market supply and excessive money supply."
Land supply in China increased 18 percent year on year to 4.28 billion square meters in 2010. In comparison, land sales soared 70 percent from a year earlier last year to 2.7 trillion yuan (US$40.72 billion), according to the Ministry of Land and Resources.
Land sales have been surging in China since 2004 when a new mechanism was introduced. Most land parcels offered since then were auctioned and that was the major reason behind skyrocketing prices, industry analysts said.
Between 1992 and 2003, land sales generated more than 1 trillion yuan whereas in 2007 alone they yielded 1.3 trillion yuan, according to earlier statistics released by the ministry.
Increases in home prices have far outpaced those of incomes and analysts are worried a property tax will dig deeper into households' pockets.
"The property tax could easily be transferred to those who really need new homes and add a tax burden on those who have already been struggling with high tax schemes in the country," said Li Xiao, a real estate researcher in Shanghai.
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