China May Expand Pilot Property Tax Program Nationwide

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Jan. 6 – China may implement a pilot property tax program nationwide reports Shanghai Securities News.

Morgan Stanley said that China may levy a tax on commercial real estate in “selective regions” before applying a levy on residences in an effort to temper the heated property market. It will take some time before the pilot program is officially made into law and by then it would be the first time a nationwide tax will be levied on the value of property in China.

The pilot program for property tax has already been in place for six years in Beijing, Liaoning, Jiangsu, Shenzhen, Chongqing, Ningxia, Fujian, Anhui, Henan and Dalian.

An associate professor at Tsinghua University’s School of Economics and Management, Patrick Chovanec, said: “In China, local governments are dependent a lot on land sales as a kind of revenue source, and that means they have the incentive to boost the property price, but it is not a sustainable kind of revenue, because land sales are a one-time thing.”