China’s controversial property tax appears to clear major hurdle, but questions remain on start date

Implementation of a national household registration system after a decade-long effort could usher in a property tax that would help alleviate local-level government debt pressure and narrow wealth gap

More than 790 million real estate certificates have been issued in China in the past decade

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Chinese households have expressed concerns that a US-like property tax would take a heavy financial toll. Photo: AFP

Published: 8:18pm, 26 Apr 2023Updated: 6:06am, 27 Apr 2023

China has completed a major technical step toward a controversial property tax that now awaits approval by leadership – a decision that could help alleviate the crushing debt pressure on local governments while advancing Beijing’s plans to narrow the wealth gap.

The progress was announced on Tuesday by natural resources minister Wang Guanghua, who said a national registration system is now in place after a decade-long effort to record all of the information on urban apartments, villas, offices and rural houses.

In the past 10 years, China’s Ministry of Natural Resources has issued more than 790 million real estate certificates, which mainly refer to properties in official documents.

However, Chinese households have expressed concerns that a US-like property tax would increase their holding costs, as only commercial housing holders currently pay a small property tax. And the move could be yet another sign for developers that the good old days are not coming back.

The national household registration system “is a must-have precondition for the property tax”, said Zhang Dawei, a Beijing-based market analyst with Centaline Property. “It generated bigger and bigger impacts in the past 10 years, while we are feeling” the tax more.

The creation of a national housing registration system began in 2013, and it has been widely discussed for its role in potentially curbing the rise in property prices, especially after President Xi Jinping began saying in 2016 that “houses are for living in, not for speculation”.

Such an information system would help tax bureaus assess how many apartments a family owns and decide how property tax should be collected, if top leaders decide to proceed with it.