Property tax concerns for China’s homeowners, buyers amid Xi Jinping’s common prosperity drive
- China’s property tax plan is part of Xi Jinping’s so-called common prosperity campaign to redistribute wealth and to address widening social inequality
- After a five year pilot programme, both residential and non-residential properties will taxed based on their values, but rural households will be excluded
This is the first in a three-part series looking at the potential impact of China’s proposed property tax law.
Timing, we are told, is everything. The success of something is often related to when it happens.
The policy will not take immediate effect and China will first carry out pilot schemes for the next five years in several selected cities, and while it is highly likely it will happen, the when factor has become increasingly important given the current pressures faced by China’s property sector and the potential implications for the national and global economic landscapes.
“We must actively and steadily push forward property tax legislation and reform, and carry out pilots well,” President Xi Jinping said in August when spelling out his vision to lead the Chinese people to so-called common prosperity, with property tax one of the few specific policies mentioned.
Homeowners and prospective buyers now have to factor in their potential liability for future taxes, which reduces property values
After years of debates on the first recurring property tax, with only property transactions currently taxed in mainland China, a property tax law will be “promptly” drafted once the pilot schemes have been completed.