China will set up a property tax pilot plan, taking small steps after years of dithering to tame home prices for common prosperity

The State Council will select the first regions and the timing for collecting the dutiable tariff on land, as well as owners of residential and commercial real estate, according to the state news agency Xinhua

Legally owned rural homes will be exempted from the pilot plan, which lasts for five years before the National People’s Congress (NPC) turns it into a nationwide law, Xinhua said

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A housing complex by China Evergrande Group in Guangzhou. Photo: AFP

Published: 9:30pm, 23 Oct 2021Updated: 10:48pm, 23 Oct 2021

China’s legislature will enact a property tax in selected regions across the country, rolling out the pilot plan as part of a wider “common prosperity” programme to enhance housing affordability and tame runaway prices.

The State Council, as the government’s Cabinet is known, will select the first regions and the timing for implementing the dutiable tariff on land, as well as owners of residential and commercial real estate, according to the state news agency Xinhua.

Legally owned rural homes will be exempted from the pilot programme, which will last for five years before the National People’s Congress (NPC) turns it into a nationwide law, Xinhua said.

The Ministry of Finance and the State Taxation Administration will draft the relevant measures and regulations for supporting the pilot programme, Xinhua said.

People look at a scale model of apartment buildings in a showroom of the property developer Yango in Xuchang city in Henan province on February 19, 2019. Photo: Reuters.

A pilot plan that lasts five years “implies that it will be at least five years before the introduction of the [nationwide] legislation at the earliest,” the independent economist Ma Guangyuan said in his Weibo post. “The suspense now is which specific cities will be picked for the pilot, and when it will start.”

It has been barely four decades since China transformed the nation’s communal housing into private ownership, a revolution that created the world’s largest property market with US$1.7 trillion of new homes sold in 2017, seven times bigger than the United States, according to Stansberry Churchouse Research. Harking to its socialist roots, the Chinese government had tossed about the idea of taxing property owners for years to rein in runaway prices, redistribute wealth and bolster state coffers with much-needed revenue.