Finance

Minister pitches for wider property tax

PUBLISHED : Friday, 28 October, 2011, 12:00am
UPDATED : Friday, 28 October, 2011, 12:00am

A senior Ministry of Finance official has called on national lawmakers to extend a pilot property-tax scheme - the first of its kind on the mainland - to the rest of the country.

Assistant Finance Minister Wang Baoan said at a National People's Congress Standing Committee session on the construction and administration of subsidised housing that the scheme, which was levied on owners of relatively large flats, was going well in Shanghai and Chongqing .

'The next step we should take is to learn from their experience and step up efforts to establish a national property-tax policy, to further expand the role it has in controlling housing prices and regulating the market,' Wang was quoted by Xinhua as saying yesterday.

A tax was levied on large, expensive homes in Chongqing and Shanghai in January on a trial basis as part of efforts to rein in speculation and housing inflation. The central government has struggled to reduce stubbornly high inflation rates without damaging the fast-growing economy. Containing rising home prices is a key part of that effort.

Wang's remarks are another sign that the government will expand the property tax nationwide.

Earlier this week, Jia Kang, head of the Institute of Research at the Ministry of Finance, said he was certain that a national property tax would be launched within a year.

Before yesterday's Standing Committee session, He Keng, vice-chairman of the NPC Financial and Economic Affairs Committee, said he believed the property tax was the most important economic measure to stabilise the housing market.

The tax in Shanghai and Chongqing has affected the housing market in other cities, including Beijing.

Sales of villas and large flats were dampened by would-be buyers' concerns over future tax payments, sales staff members said at recent trade shows in Beijing.

Chongqing has expanded its pilot scheme, which originally applied only to property transactions completed after January, local media said. From this month, owners of 3,600 luxury homes in Chongqing will have to pay annual taxes of up to 1.2 per cent of the original purchase price, even if the home was bought before the tax was introduced.

This tax policy was aimed at using market forces rather than administrative means to rein in property market speculation, Wang said. Taxing luxury properties rather than cheaper homes could lead to development of public housing for low- income earners, he said.

At the same session, Minister of Housing and Urban-Rural Development Jiang Weixin hinted more was likely to be invested in state-subsidised homes next year. The government planned to start building 10 million affordable homes for low-income families this year.

1.3tr yuan

The amount of money likely be invested this year to build affordable public housing for low-income Chinese earners