A policy paper issued by a state think tank has recommended that China implements a national property tax, calculated annually, as a means of reforming local government finances.
The property tax would provide extra revenues for local governments and help reduce their dependence on land auctions and inflated property prices.
There is currently little incentive for local government to curb rampant property speculation. The report notes that local government is heavily reliant upon the revenue generated from property transaction taxes, and as such is not sufficiently motivated to tackle price bubbles at the local level.
Jia Kang, a senior researcher of the Chinese government was quoted as saying that property taxes would have a "calming" effect on market prices.
The Chinese government has also been looking at ways of releasing more land for development and increasing credit controls as a means to curb price rises.
.Tags: tax | investment | real-estate | legislation | real-estate investment | China | property tax | fees | fiscal policy | tax reform | China
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