Expert: Property tax necessary in China

14:25, May 04, 2010      

Email | Print | Subscribe | Comments | Forum 

In light of sustained high housing prices and rumors that property taxes may soon appear in major cities such as Beijing, Shanghai, Shenzhen and Chongqing, the topic of property taxes has once again attracted unprecedented attention. Jia Kang, director of the Research Institute for Fiscal Science under the Ministry of Finance said that it is very necessary to levy property taxes during an interview with People's Daily.

Jia said collecting property taxes can bring local governments a major, stable and growing source of tax revenues, which will sustain the long-term transformation of local governments' functions and behaviors and help to complete the comprehensive fiscal, tax and administrative reforms.

If property taxes are levied on real estate owners, it can lead to rational behaviors from both housing supply and demand by posing a tax constraint, Jia said.

"It is worth placing particular attention to the positive effects of collecting property taxes in China where urbanization has just begun. Land resources are exceptionally scarce and fluctuations in the housing market will pose a significant impact on the economy," Jia added.

He believes that collecting property taxes can have three positive effects. First, it can increase the proportion of demand for small and medium-sized houses, benefiting the intensive use of land, the sound development of urbanization and the transformation of economic development. Second, it can help reduce the vacancy rate of existing housing and enhance the allocation efficiency of social property resources. Third, it can help restrain property investments and speculations and benefit the long-term, sound development of the real estate industry.

The property tax will objectively increase the costs to high-income people who have bought several houses or even luxury houses, and the tax levied can be used to improve the living standards of low-income people. This reallocation of resources is of great urgency and practical significance to rationalize China's income distribution system.

Some people may wonder whether the property tax is necessary since the government has already levied a land-transfer tax. Jia explained that developers pay land-transfer taxes for the rights to use the land, while property tax is levied on the homeowners during their tenure of the houses. Therefore, the two taxes do not interfere with each other and there are no insurmountable "legal barriers" or "repeated charges."

Jia concluded that market economy countries have many years of experience in levying real estate taxes, and China should draw on their rich experience based on current national conditions to achieve better development.

By People's Daily Online


  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • On Sept. 26, a resident passes by a flower terrace decorated for the coming National Day. (Xinhua/Hang Xingwei)
  • The photo, taken on Sept. 26, shows the SWAT team ready for the joint exercise. (Xinhua/Wangkai)
  • Two metro trains in Shanghai collided Tuesday afternoon, and an identified number of passengers were injured in the accident, the Shanghai-based reported. Equipment failures were believed to have caused the crash on the Line 10 subway, Xinhua quoted local subway operator as saying.
  • An employee at a gold store in Yiwu, located in east China's Zhejiang province, shows gold jewelry on Monday.(Xinhua/Zhang Jiancheng)
  • Tourists ride camels near China's largest desert lake Hongjiannao in Yulin, north China's Shaanx Province, Sept. 24, 2011. Hongjiannao is shrinking as a result of climate change and human activities, and may vanish in a few decades. Its lake area, which measured more than 6,700 hectares in 1996, has shrunk to 4,180 hectares. Its water level is declining by 20-30 centimeters annually and its water PH value has risen to 9.0-9.42 from 7.4-7.8. (Xinhua/Liu Yu)
  • Actors perform royal dance at the Gyeongbok Palace in Seoul, Sept. 27, 2011. A ceremony commemorating the 38th South Korea Sightseeing Day was held in Gyeongbok Palace on Tuesday. (Xinhua/He Lulu)
Hot Forum Discussion