Xia Lei: Is the real estate tax going to be introduced?

　　Zhongxin Jingwei October 19 Title: "Xia Lei: Is The Real Estate Tax Going to Be Launched?" 》

　　Author Xia Lei (Co-Director of Guohai Securities Research Institute)

　　Recently, Qiushi magazine published an important article "Solidly Promoting Common Prosperity". The article points out that it is necessary to actively and steadily promote the legislation and reform of real estate tax and do a good job in pilot work.

　　Real estate taxes can play an important role in achieving common prosperity. First, real estate is the main asset of Chinese residents' families, and real estate is the main reason for the wealth gap among residents, and the collection of real estate taxes will effectively narrow the gap between residents' property. Second, the property tax will become a necessary supplement to local tax revenues to get rid of local dependence on land finance. According to the "Fiscal Revenue and Expenditure in 2020" released by the Ministry of Finance, in 2020, the income from the transfer of state-owned land use rights will account for about 94% of the revenue of local government funds, and about 44% of the main fiscal revenues at the local level (general public budget revenue + government fund revenue). Land finance, which relies only on development, is difficult to sustain, and broadening the source of tax revenue is the only way to go.

　　Actively promote real estate tax legislation and reform. Since the real estate tax was listed as the legislative plan of the Standing Committee of the 12th National People's Congress in 2015, the real estate tax has appeared in relevant central meetings and documents many times. From 2018 to 2019, the government work report for two consecutive years mentioned "real estate tax legislation". On May 11, 2021, the website of the Ministry of Finance disclosed that the responsible comrades of the Ministry of Finance, the Budget Working Committee of the Standing Committee of the National People's Congress, the Ministry of Housing and Urban-Rural Development, and the State Administration of Taxation presided over a symposium on the pilot work of real estate tax reform in Beijing to listen to the opinions of responsible comrades of some urban people's governments and some experts and scholars on the pilot work of real estate tax reform. It indicates that the real estate tax has reached the stage of substantive advancement.

　　Introduce real estate taxes in a prudent manner. The timing of the introduction of real estate taxes should be the upward or stable period of the real estate market, with the smallest marginal impact and easier to be accepted by the market, and the downward trend is not appropriate. When the housing market rises, the expected cost of real estate taxes is much lower than the expected benefits of house prices and rent increases, and the tax will not have a significant impact on the market. When the market goes down, the expected loss of holding real estate is magnified, making the holder more eager to get out of the hand and accelerate the decline in house prices.

　　Pilot first, timely summary of experience. In 2011, Shanghai and Chongqing took the lead in carrying out the pilot reform of real estate tax, but the tax sources brought by the pilot were limited, the adjustment of the gap between residents' assets was limited, and the impact on housing prices was not obvious. The main reason for the limited effect of the pilot in Shanghai and Chongqing is the narrow scope of taxation and the low tax rate. The real estate tax plan should meet: first, the design of the tax system is led by the local government to avoid "one size fits all"; the second is to pilot from economically developed areas and gradually transition to the whole country; the third is to set a reasonable value assessment base period and tax rate adjustment mechanism to ensure that residents can afford it; fourth, residents' self-housing tax reductions, or set per capita exemption area to meet residents' self-occupation needs. (Zhongxin Jingwei APP)

　　Xia Lei

　　Zhongxin Jingwei copyright, without written authorization, any unit and individual shall not reprint, excerpt or otherwise use. This article does not represent the views of Sino-Singapore Jingwei.