Rates should apply to bigger properties: report

PUBLISHED : Tuesday, 06 February, 2007, 12:00am
UPDATED : Tuesday, 06 February, 2007, 12:00am

People owning more than 30 square metres should pay levy, says institute

The central government should levy property rates only on those owning more than 30 square metres, said a research institute attached to the mainland's top planning agency.

The Academy of Macroeconomics also said the government should speed up legislation that would see the introduction of property rates to rein in rocketing housing prices and real estate speculation.

'Although demand is expected to decline over the next two years, the NDRC [National Development Reform Commission] has emphasised the need to speed up the process of finalising legislation on property rates,' the Beijing Commercial Daily said yesterday citing the academy, which is affiliated to the commission.

The report also said the heaviest burden would be on property owners with each family member owning more than 30 square metres.

The State Administration of Taxation revealed for the first time last week that it was considering levying property rates to aid efforts to cool the mainland's red-hot real estate market. The tax on property ownership is among a number of new levies listed as priorities by the administration in its working guidelines for this year.

Unlike other taxes paid when buying or selling properties, rates would be levied on those holding properties, the administration said. It did not give details of how and when the tax would be enforced. But a mainland tax expert said the rates would be 1 per cent to 2 per cent of a property's value a year.

Meanwhile, the central government is launching a nationwide investigation to ensure that local governments implement a central plan to build subsidised housing for the urban poor.

The central government would hold regional officials accountable if they failed to implement Beijing's policy on property, yesterday's China Economic Weekly quoted Ministry of Construction officials as saying.

A directive issued early last year by a central taskforce headed by the Ministry of Construction demanded that local governments publish plans for the development of subsidised housing in their areas.

But by the end of September, 65 per cent of large and medium cities, and 91.1 per cent of county-level cities had failed to publish their plans, the ministry said.

The academy said the government's macroeconomic control measures had failed to rein in property prices last year and it expected prices to continue to climb rapidly this year.

Property investment was expected to increase by more than 20 per cent this year, while the number of buyers would probably decrease, it said.

The first three quarters of last year saw investment in the property sector increase by 29.5 per cent year on year.

Imposing property rates on the mainland has been widely debated in recent years. While the central government is concerned that rising property prices will further widen the yawning wealth gap and cause social instability, local governments are reluctant to toe Beijing's line because they are too reliant on tax revenue from real estate transactions to allow a marked slowdown.