Chongqing may soon roll out China’s first property tax
Chongqing, a sprawling southwestern municipality in China about the size of Maine, may soon introduce the nation’s first property tax.
The plan, which was reported in state media Sunday, would be aimed at high-end housing. It’s the latest measure by Beijing to slow rising housing prices that are sowing discontent among ordinary Chinese.
The report said the tax could be unveiled in the next three months, but it did not define “high-end housing” or explain how the plan would work.
Property taxes could provide an alternative source of revenue to local governments, which rely heavily on land sales to developers in order to fund public services. That dependence gives local officials incentive to drive up land prices, which ultimately pushes up housing prices for buyers.
A property tax also would help discourage speculators from buying apartments and leaving them empty, a common practice in China that has become a symbol of the growing wealth divide here.
Policymakers have been mulling the idea of a property tax in major cities for some time. The challenge is how to do it. Many municipal governments lack modernized, comprehensive records of property ownership.
Still, calls for Beijing to do more to curb rising real estate prices are growing louder. Previous government cooling measures, including requiring higher down payments from purchasers and adding restrictions on purchasing multiple homes, have had little effect. An index of 70 cities in China showed that as of November, housing prices had risen three months in a row.
Still, there is risk in putting too many restrictions on an industry that is responsible for up to a fifth of China’s gross domestic product. Real estate also has been a refuge for investors flush with cash hedging against China’s rising inflation.
Other cities that have been rumored to be considering property taxes are Beijing, Shanghai and Shenzhen.
Chongqing, home to 32 million people, saw its residential property prices grow 37.9% in 2010, according to the real estate tracking website SouFun.com.
