Private home ownership in China only began in 1998, yet prices have skyrocketed so much that a place to call their own is becoming increasing unaffordable for many people. The government has tried for years to address the problem by going after speculators. Now, amid a broad effort by President Xi Jinping to address widening social inequality, authorities are revisiting an idea long-discussed but never realized: imposing a property tax. If implemented, such a tax could have far-reaching implications for the country’s 300 million-strong middle class.
1. Why do we think it might be coming?
Legislators and officials from finance and housing ministries and the tax administration held a seminar in May on a new trial program in Beijing to hear from local officials and scholars. It marked the first time high-level policy makers collectively discussed the trial, which would cover both the land and structure in line with the global standard. That same month, Finance Minister Liu Kun said China aims to advance tax reform legislation by 2025. It was the second time he brought up a property tax in less than six months. There also have been escalating curbs on the real estate sector, from “red lines” on borrowing by developers to increases in mortgage rates in some cities. More broadly, the government seems to be on a campaign to try to ease financial pressures on the middle class, from restricting expensive after-school tutoring to ordering higher wages for gig-economy workers. Bringing down house prices with a new tax would fit that priority.
Read More at https://www.bloomberg.com/news/articles/2021-08-06/why-china-could-be-serious-about-a-property-tax-now-quicktake
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