China has decided to pilot testing property tax levies in selected cities during the coming five years, to garner experiences before proceeding with formal legislation.
The Standing Committee of the National People's Congress (NPC), China's top legislature, adopted the decision on Saturday to authorize the State Council, the cabinet, to pilot property tax reforms in some regions.
Industry experts say a trial property tax could be tested by the end of this year in selected first- and second-tier cities that have hot real estate markets, most likely in Guangdong's Shenzhen, Zhejiang's Hangzhou, and the southern island province of Hainan.
China's central government, ever since 2011, has tried out levying the taxes on high-end private residential properties in Shanghai and Chongqing, two mega cities. Since then there has been much discussion of expanding the tests nationwide, though there has been little progress to date, as many local governments are reluctant to push for such a tax out of worries that the property taxation will cause property values to drop, and dampen market demand of land — a crucial source of local governments' revenues.
The latest NPC authorization for the State Council is for the purpose of guiding rational consumption of housing, and economical use of land resources to promote the steady and sound development of the country's real estate market.
The property tax in the pilot areas will be levied on all types of real estate, including residential and non-residential properties, excluding legally owned rural houses.
With a trial period of five years, the State Council, the cabinet, will roll out specific measures for the pilot real estate tax, and the governments of the pilot areas will come up with detailed implementation rules.
