Mainland leaders face rough road to reforms

Vital tax reforms are unlikely in the foreseeable future as Beijing's new leadership faces a daunting battle to win the approval of powerful interest groups.

The State Council on Tuesday issued guidelines on the long-awaited income distribution reform, vowing to increase minimum wages, limit the incomes of senior managers in state-owned enterprises and "enhance income adjustment by taxation".

The release of the plan after eight years of debates was already a triumph for the new leadership, but the road to implementation was not expected to be smooth with challenges from vested interests, analysts said.

In the guidelines, the cabinet said the government would reform property taxes by "improving the taxation system in property ownership and transactions" and "gradually expanding the pilot scheme of individual property tax".

"The leadership seems to be resolved to push ahead with the property tax reform," said Ma Guoxian, director of Shanghai University of Finance and Economics' Public Policy Centre. "But how to do it remains a question, considering expected opposition from corrupt government officials, large real estate developers, local governments and related ministries."

Local governments, relying heavily on land sales to make ends meet, try to sell land at high prices. Developers make profits on top of the unreasonably high land prices. Buyers pay the price of a property and various taxes.