Experimental Property Taxes to be Tested in More Cities this Year
According to the deputy head for the Ministry of Housing and Urban Rural Development Qi Ji, China is planning to conduct an experimental property tax program in more cities this year at a moderate pace. However the ministry is still yet to decide on the cities in which the program will be expanded.
Several speculations on potential cities were placed on the discussion table, but studies show that first tier cities are better choices with housing markets more mature and pre-owned houses are often replaced by newly built houses as the main market for sales. Shenzhen and Guangzhou will be part of the qualifying cities to undergo the experimental property tax program as both cities have a thriving property market. A recent report by Founder Securities revealed that well equipped second tier cities are also likely to be chosen.
Property taxes help curb home purchases as people take the cost into account when deciding to buy a house. Property taxes were supposed to be a transformed into a long standing system rather than a temporary control of the real estate market. The tax plays an important role in reducing the housing market bubble and at the same time brings substantial revenues for the local governments that are currently struggling financially.
The current problem with property taxation is how to create a reliable coordination mechanism to ensure that there will be equality in levying property taxes on individuals. It is difficult to tell the qualifiers apart for the duty free houses in the complex housing situations in China. A new and improved formula will be created that will tax stocking houses and new houses as well.