China puts property tax on hold

The expansion of the pilot property tax programme on the mainland has been deferred, the official China Securities Journal reported yesterday.

The journal quoted unnamed official sources as saying that a proposal to expand the tax scheme was put on hold as its implementation required overcoming too many technical problems such as reforms of land and taxation systems.

Only property sales in Shanghai and Chongqing currently attract property taxes introduced by their municipal governments in 2011 under the direction of the central government, in a bid to curb the rise in property prices in the cities.

Mainland media had earlier reported that similar measures were to be introduced in other major cities later this year, and the government would also consider further measures to keep demand and price growth under control.

Market rumours said the plans were scrapped because the new central government leadership team took a different view on property tax, and premier-in-waiting Li Keqiang was worried that the introduction of a property tax would hit his urbanisation plans.

Alan Chiang Sheung-lai, head of residential property on the mainland for property consultancy DTZ, said the government should not have deferred plans to expand the property tax scheme if it wanted to quicken the pace of urbanisation.