China Can Expand Property Tax Trial, Ex-Government Researcher Says
China Can Expand Property Tax Trial, Ex-Government Researcher Says
(Bloomberg) -- China can test the property tax in more regions including the technology hub of Shenzhen as well as Hainan and Zhejiang provinces, a renowned former state researcher said.
The country should expand the tax trial currently running in the cities of Shanghai and Chongqing and also proceed with legislation for a nationwide property tax, said Jia Kang, who was previously the director of the fiscal science research institute at the Ministry of Finance.
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“The central authorities have placed great hope in these three areas, and they have both good conditions and an immediate need to join the pilot trial,” Jia said in an article published Tuesday in the Global Times. Jia’s currently the director of the China Academy of New Supply-side Economics.
Shenzhen, the country’s first special economic zone in southern China, was designated to try various policies as a socialist demonstration area from 2020, while the southern island of Hainan is being built into the world’s largest free trade port. The eastern province of Zhejiang is testing policies to achieve “common prosperity,” or greater social equality.
The Wall Street Journal reported Tuesday that a plan to roll out a property tax more widely in the country has faced strong pushback from within the ruling Communist Party. A proposal involving state-provided affordable housing is emerging as an alternative, the newspaper reported, citing unnamed sources.
Any tax law may need a long time to pass parliament once it’s introduced, according to Jia, who estimated it could take more than a year to hold the normal three debates and it could even need a fourth hearing as it’s controversial.
Jia said the government can optimize the policy with different rates for regions. A property tax won’t change the upward trend of home prices in megacities like Beijing and Shanghai, but will make prices rise slower with less fluctuation and speculation, Jia said. It will also help raise the proportion of direct taxes in fiscal income to improve income distribution, he said.
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With assistance from Bloomberg