Property taxes stir debate

By Tu Lei

Levying property taxes to affect housing prices is not the best option given other countries' experiences, according to a researcher from the People's Bank of China.

"The UK started to collect property taxes in 1993 but housing prices still soared. And the housing price in the US still was up by 43 percent between 2000 and 2006 after the property holding taxes were collected," Xiong Lu said in the China Reform magazine under the National Development and Reform Commission.

Xiong's comments reveal investors' worries towards coming property taxes as an option of last resort because many cities' prices remain high, despite a raft of policies aimed at cooling down the sector.

Figures from the National Bureau of Statistics showed that the housing sales price in 70 medium and big cities was up 10.3 percent in July, and analysts said it is possible to see the government to launch the property tax, and predicted the amount will be "at least 70 billion yuan ($10.31 billion)."

In May, the State Council expressed support for property taxes to cure the housing fever, and there have been reports saying that some cities such as Chongqing and Shanghai will launch pilot programs.

"One of the goals of property tax is to restrain speculation, but will taxes be levied on the first or the second house?" Outlook Weekly quoted Yang Zhiyong, a researcher from the Chinese Academy of Social Sciences, as saying.

"It is possible for the seller to transfer the tax to the buyers," added Yang.

Li Xiaogang, director of the foreign investment research center at the Shanghai Academy of Social Sciences, told to the Global Times that the government would have to decide whether to levy taxes on a per-person or per-family basis.

"Property taxes will not restrain the soaring housing prices because it will not impact speculators," warned central bank adviser Li Daokui Sunday.

So far, the government has conducted four rounds of macro-controls toward the housing market.

Between 1998 and 2002, the government launched a series of policies including loan, tax and land supply to bolster the market.

Beginning in 2003, the government started to regulate land, loans and taxes, but then began encouraging investment in September 2008 at the outbreak of the financial crisis.

A series of cooling policies were released starting in November last year but so far have had only a modest impact.

Source: Global Times