Introduction of Real Estate Tax Arouses Wide Attention in China
Final decision's report of the Third Plenum, unveiled on Nov. 15 by the Communist Party of China Central Committee, said China will introduce property tax legislation, revealing its plan to expand the pilot programs nationwide.
When will it be implemented across the nation? And will it completely achieve its goal?
Wu Jinglian, a famous Chinese economist, said the introduction of a real estate tax in the near future is unlikely to suppress the country's rising house prices at a forum held in Shanghai by the China Europe International Business School, Shanghai Securities News reported on Nov. 25, 2013.
Implementation of a property tax is expected to overtake outright macro curbs in the sector and guarantee the long-term health of the real estate market.
But the question is when. There is a big controversy over the timing of the introduction of a real estate tax, Wu said, adding that the master plan aims to levy the tax soon, but the property industry has a different view.
Furthermore, the property industry is the supporting force for economic growth and economic structural reforms, and the fact has not changed, noted another economist Ba Shusong.
Ba is a senior analyst with the Development Research Center of the State Council, an influential government think-tank.
In his view, China's future property policies must strike a tough balance between the decelerated growth of the Gross Domestic Product and the rise in home prices.
The "floor logic" in economic growth among policymakers means that property policies in the near future would still depend on economic growth rates, he said.
If the growth rate were to fall below the growth floor, the government would probably respond with weaker enforcement of existing policies and a delay in rolling out new policies for the property industry, hence, the timing of the introduction of a real estate tax will partly depend on economic growth, Ba added.
Driven by rapid urbanization and huge demand, China's house prices have spun out of control in recent years and become a major headache for the authorities as more people are priced out of the market.
In October, China's house prices continued to hike. According to data released by the National Bureau of Statistics, of a statistical pool of 70 major Chinese cities, 65 saw month-on-month rises in new home prices, and 62 reported price gains in new and second-hand homes.
In response to growing public complaints, the governments at various levels have tried times to rein in prices by creating purchase restrictions and experimenting with other measures.
Now the public is looking forward to the introduction of the tax, hoping highly it will finally cool the market and make house prices more rationale.