China expands land tax essay
BEIJING, China: China is preparing to expand its pilot land tax reforms, state media reported, as the government combats real estate speculation in the world’s second-largest economy.
China’s housing market took off after key reforms of 1998 triggered a construction boom amid rapid urbanization and wealth accumulation.
But as prices skyrocketed, concerns about wealth disparities and the resulting potential for social instability also increased.
China’s top legislature, the Standing Committee of the National People’s Congress, on Saturday approved the latest plan to promote “rational housing consumption,” according to the state-run Xinhua news agency.
Under the five-year pilot program, Xinhua added, the property tax will be levied on all types of real estate except some rural households.
Further details, such as its start date and target areas, are expected to be disclosed at a later date.
The announcement comes as President Xi Jinping is pushing for more “common prosperity” in China in an effort to distribute wealth more equitably.
In 2011, authorities began trials in Shanghai and Chongqing targeting high-end private residential properties for taxation.
There have been talks to expand this tax, but localities have been reluctant over fears it will lower property values and dampen demand for land, a key source of local government revenue, the tabloid said on Saturday. ‘State Global Times.
China’s real estate sector is in troubled waters with home sales plunging 16.9% year-on-year in September and heavily indebted real estate giant Evergrande grappling with a liquidity crunch.
Some analysts believe, however, that the latest tax measure is aimed at preventing prices from rebounding to earlier levels.
“The chances of a national tax being implemented are much higher now,” Mark Williams of Capital Economics said last week as reports revealed a plan was stalled.
Opposition to the insider tax was not new, he added, as the correlation between Communist Party membership and ownership of multiple properties is “probably quite high.”
“But demographics mean the 25-year real estate boom is ending,” he said.
“Land sales are no longer a sustainable source of government revenue. A modest property tax could be.”