China is actively pushing forward property tax reform
China is currently pushing forward reforms on property taxes because the given move is expected to update the country’s fiscal system. That’s what we’ve learnt from Finance Minister Lou Jiwei.
In 2011, China has already introduced an annual residential property tax on some homes in Chongqing and Shanghai, although it hasn’t been expanded since.
Any progress on expanding the tax would be a key development in the country’s red-hot housing market, where prices have surged by more than 30% annually in many key cities.
The evident lack of any annual taxes to pay simply means that it makes more sense for investors to leave homes empty instead of hurting resale values by renting them out, because prices keep ascending.
In Shanghai, annual tax rates are less than 1% of the purchase price of the home. It compares to September’s 32.7% surge in home prices in Shanghai year-on-year.
China’s pushing forward reforms on individuals' taxes and in the nearer future consumption tax policies will be improved in this Asian country to further impact adjustments to output and promote consumption.