Yi Xianrong: The introduction of real estate tax is a major adjustment of interest relations

I was involved in the discussion and research on the levy of real estate taxes in 2005 and have written many reports on this. Therefore, I have paid attention to and studied this problem tirelessly for more than ten years. Recently published in Exploration and Controversy (No. 4, 2018), "Research on Several Major Theoretical Issues in China's Real Estate Tax" is basically a theoretical summary of this issue (the paper has 15,000 words). In my paper, I basically clarified some of the specious views that are popular in the market.

However, we should also see why when it comes to imposing a real estate tax, the debate in the market will be raging. Any specious views will flock out, and even these statements will be popular. Why?

Although the real estate market has been developing for more than a decade, it is still a new thing for many people in China, and the vast majority of people do not know much about it, so the vast majority of people can only understand various specious views according to their own interests.

Second, what is more important is that the introduction of any institutional rules is an adjustment of interest relations. The introduction of real estate tax is a major adjustment of interest relations. Then in the face of this major adjustment of interest relations, different people will always defend their interests in different ways to approve or oppose the introduction of real estate taxes. In a democratic and liberal modern society, this would have been the most normal thing. However, once those inflammatory and specious views become the basis of government policy, they will of course seriously infringe on the interests of the vast majority of the people and allow the interests of the minority to be protected or asserted. Therefore, the public must maintain sufficient vigilance against this, and the intellectual circles must also conduct more in-depth research and publicity on this.

For example, the recent government's real estate tax collection policy is estimated to be introduced soon, and some people have introduced what to solve 15 problems in collecting real estate tax, otherwise the government should not levy real estate tax. For example, the problem of 70 years of property rights in commercial housing, the problem of China's land system, the problem of insufficient real estate tax to compensate for the income from land transfer fees, the problem that the levy of real estate tax cannot curb the rise in house prices, and so on.

These questions seem to be a logical one, but not only are the problems plausible, but these discussions have neither doctrinal internal logic nor empirical basis, but are mostly based on rhetoric. For example, does the real estate tax have to define housing as private property rights? This is a view that has always been popular in the market. Saying that the current commercial housing in China has only 70 years of property rights, and the ownership is in the hands of the government, the government has no reason to levy real estate taxes. However, from the experience and law of various countries, the collection of real estate tax is a tax on the property held, not in the private property rights or common property rights, not in the ownership or use rights, can be property tax in the way of real estate tax, not to mention that China's commercial housing has long been all the rights of the housing holders (such as substantive ownership, use rights, transfer rights, residual claims, etc.) hands, the recently passed by the National People's Congress of the Civil Code clearly stipulates that commercial housing can be automatically renewed for free after 70 years. What rights in the commercial housing held by individuals are in the hands of housing holders, and their benefits belong to individuals, but the social costs of housing holdings do not need to be borne. How can the commercial housing held by individuals be valuable without the various services of modern society? Usually, we residents have to levy personal income tax on a little wage income and writing fees and labor income, so why shouldn't Chinese residents levy taxes on the huge housing properties held by Chinese residents? This is the root cause of the current problems in China's real estate market, the prevalence of speculation, and the serious unfair distribution of residents' income? It can be said that the current Chinese real estate market tax system is one of the worst in the world, it is also the root cause of the current Chinese real estate market problems, the government does not start from here, to solve the current Problems in China's real estate market is impossible.

In addition, China's land system is unreasonable, especially the "China Urban Land Management Law", which is an "evil law". This land system has not only caused chaos in China's land market, but also caused serious social inequality, and is also a tool for corruption of local government officials. It can be said that the huge corruption of a small number of government officials, the overnight wealth of farmers around the city, and the continuous increase in urban housing prices are all related to this land system. However, we cannot levy real estate tax because the initial conditions of the current system are insufficient.

For any new institutional arrangement can never emerge in a vacuum, nor can it be based on a purely ideal state, and if so, new institutional arrangements can never be established. Therefore, the existing land system should be revised, but it cannot be done without a real estate tax because of the problems of China's land system, which is a two-sided problem.

As for some people, the introduction of real estate taxes cannot curb the problem of high housing prices, which is even more ridiculous.

Because if the government's real estate tax is only aimed at curbing high house prices, then curbing high house prices may be an easy task. As long as the tax rate is high enough to drive out real estate speculation, how can high house prices not come down? But real estate tax as a property tax, its basic function is not here. Foreign practice has proved that under the market economy system, the collection of real estate taxes is the law of the market economy (the principle of self-payment by the user), and it is an important way to promote modern national governance (establishing taxpayer awareness and constraining government power) and promoting modern social civilization. Therefore, if Chinese society wants to modernize, it must improve various tax systems, and the collection of real estate taxes is one of the ways. Therefore, the real estate tax is not a problem of collection, but whether it is a fair and just real estate tax.

Therefore, the fairness and impartiality of real estate tax is the basic principle of modern taxation, and it is also the premise for the smooth implementation of real estate tax. It is also key to the success of domestic tax reform. So how can we ensure the fairness and impartiality of real estate taxes? From the international experience, not only the development model of real estate tax is diverse, but also the formation of a mature real estate tax system often requires a long process, coupled with the rich diversity of the connotation and function of real estate tax, which requires China to design real estate tax, first of all from China's initial conditions, such as the design of starting real estate tax collection, first focus on ensuring residential justice, curbing real estate bubbles and adjusting income distribution relations (such as South Korea's real estate tax). Other functions are then gradually added as the real estate tax matures. Because only by dealing with these current real estate market problems can other real estate tax functions be brought into play. Otherwise, if you start with the general model of introducing a real estate tax, you may be able to do more with less. Or it is designed in the general model of introducing a real estate tax, but its functional implementation is carried out in stages, giving the society a clear and unambiguous policy expectation.

Secondly, real estate tax is a benefit tax and a local tax. In developed countries in Europe and the United States, the difference in economic development between rural and urban, urban and urban will not be very large, and it is also caused by the long-term evolution of the market, and the real estate tax as a local tax will not seriously hurt the equalization of government public services. However, china's economic development differences between rural and urban, urban and regional are very large. Moreover, to a large extent, this difference is artificially caused by the previous planned economy, and the economic resources are mainly power-oriented to a small number of cities. The value of housing in many cities in the country is the result of this power gathering resources.

Therefore, the real estate tax has both a central government management part and a local government management part, especially the latter part should be gradually implemented. For example, real estate tax can be divided into commercial real estate tax and residential real estate tax, and residential real estate tax is defined by price (such as 20,000 yuan per square meter) and general residential real estate tax. For commercial real estate tax and high-end residential real estate tax, the central government can manage and formulate tax rates, collected by local governments, uniformly paid to the central government, and transferred by the central government for the people of the whole country to share. General residential real estate tax is administered by local governments. Otherwise, even if the most fair and just real estate tax in the region is designed, it is easy to lead to a serious Matthew effect or a serious inequality of government public services.

Third, the urban land management system and the transfer fee system have been comprehensively reformed. First, the concept of land transfer fees was justified and determined as the transaction price of land; a nationwide land fund was established, and the funds for the sale of publicly-owned land were transferred to the national land fund, which was coordinated by the central government budget and shared by the people of the whole country; the existing urban land management system was reformed to allow more rural collective land to enter the market.

Finally, strengthen and improve the basic system and infrastructure construction of real estate tax. For example, the formulation of the Housing Law solidifies the positioning of the real estate market in the report of the 19th National Congress (only living and not speculating) in the legal system, because this is the basis for the sustainable and stable development of China's real estate market in the future. Conduct a nationwide census of Chinese housing and establish a housing information system shared by the whole people. Clean up the names of different types of houses and clean up the problems left over from history. Clean up and simplify the existing real estate tax system. The government should strengthen the education of the people on the collection of real estate taxes, so that the Chinese people have more understanding of real estate taxes. These basic institutional arrangements are very important for initiating the collection of real estate taxes.

China's real estate market has been developing for more than a decade, and it is already too late to introduce a real estate tax, and many problems in the real estate market have arisen. Therefore, it is not a question of "whether to introduce a real estate tax" at present, but a question of how to introduce a fair and just real estate tax. This is at the heart of the current debate over real estate taxes.

(Original title: Yi Xianrong: The introduction of real estate tax is a major adjustment of interest relations, the author is a professor at the School of Economics of Qingdao University, and the former director of the Financial Development Office of the Institute of Finance of the Chinese Academy of Social Sciences)