[Epoch Times October 24, 2021](Interviewed by Epoch Times reporter Yi Ru and Lin Cenxin) The controversy over the levy of real estate tax has lasted for more than ten years. The Chinese Communist Party recently decided to launch a pilot program. Experts believe that the real estate tax discussion has not been implemented for many years, mainly because it involves the interests of the CCP’s powerful and powerful people. The timing of the launch now coincides with the downturn in the real estate economy. If the expropriation is imposed, it may cast uncertainties for the Chinese economy.
On October 23, the Standing Committee of the National People’s Congress of the Communist Party of China decided to authorize the State Council to carry out trials of real estate tax collection in some areas.
The content of the decision stated that the real estate tax is classified as residential and non-residential real estate. The taxpayers of real estate tax are “land-use right holders” and “house owners”. The five-year trial of expropriation, when conditions are ripe, laws will be formulated and implemented in time.
This decision is consistent with the recent announcement by President Xi Jinping of the Chinese Communist Party that he will proactively promote legislation and reform of real estate tax, and he will do a good job of pilot projects. At that time, the outside world expected that real estate tax would make progress.
However, after Xi Jinping’s remarks were published on the 16th in the party media “Seeking Truth”, an article in The Wall Street Journal revealed that Xi Qiang’s push for real estate tax was strongly opposed by the party, which reduced the number of pilot cities from 30 to 10. Cities.
In the “Decision” of the National People’s Congress recently released in Taiwan, there is no mention of which cities or regions will be selected for pilot projects and the details of the real estate tax.
The levy of real estate tax hits the interests of the Chinese Communist Party’s powerful and powerful
Xie Tian, a professor at the Aiken School of Business at the University of South Carolina in the United States, told Epoch Times on the 24th that the pilot program was originally intended to expand from Shanghai and Chongqing to many provinces and cities across the country. The scope is reduced.
In 2011, Shanghai levied a real estate tax on a pilot basis, mainly for the second and above households, while Chongqing levied taxes on single-family commercial housing and high-end housing, both of which have exemptions. Since the trial implementation, the outside world believes that it has little impact on local housing prices.
So why is the collection of real estate taxes still controversial in the two cities’ trials for many years?
Xie Tian believes that, first, there is a lack of legal basis. Since the CCP nationalized the land, all buyers have obtained are the right to use the house, not the ownership of the land. Now, there is no reason to impose a “real estate tax”.
Secondly, if you refer to the American experience, the real estate tax rate is generally 1% of the real estate price. Based on the current real estate in China, it is estimated that the real estate tax is more than 10,000 yuan a year, and the average monthly payment is 1,000 yuan. For many middle-class and already struggling families, it is another expenditure.
Third, the biggest rebound is the CCP’s dignitaries who own multiple suites, or dozens or hundreds of suites. They own a large number of properties, but most of them have no decoration and do not need to hold costs. Once a real estate tax is imposed, they may sell assets.
Zheng Yi, a former mainland investment banker, also believes that CCP officials are the main reason for the failure to implement property tax.
“There should be more voices of boycotting within the party than voices of implementation. Why? Because officials have more than one set of houses, two sets of houses, and more. If real estate taxes are generally imposed in multiple cities, then the officials themselves The resistance will be very strong, and it will not be easy to implement it,” Zheng Yi said.
Expansion of the real estate tax pilot program puts variables in the Chinese economy
According to the analysis of Chen Tiancheng’s team of Mainland Real Estate, real estate tax is a local tax. The decision of the National People’s Congress clarified that each pilot area shall formulate specific implementation rules based on the State Council’s pilot measures, that is, the actual tax rate and exemption status, which will be determined by each locality according to the situation. .
The team expects that most cities will impose low levies within the scope, including Beijing, Shanghai, Chongqing, Shenzhen, Zhejiang, Jiangsu and other regions where housing prices are under obvious pressure to rise, or they will be key pilot cities.
Taiwanese financial expert Huang Shicong told The Epoch Times on the 24th that after the CCP’s pilot decision is issued, whether the past pilot experience in Shanghai and Chongqing can be extended to many cities across the country is still open for discussion. It is not a good time point.
He mentioned that exports, investment, and domestic demand are the troika of China’s economy. Although exports this year are good, in the future, due to factors such as power shortages and foreign capital migration, exports will decline, and related investments such as dependent exports will also decline. , And real estate is the most important part of domestic demand. If real estate declines, downward pressure on the economy will be great.
Huang Shicong analyzed, “It is equivalent to the pressure on the people, or the overall real estate boom, of course, it casts a very large uncertain factor.”
Expert: Forced property tax may cause catastrophic consequences
Zheng Yi, a former mainland investment banker, said that the CCP’s implementation of real estate tax has two main purposes: one is to regulate housing prices and curb overheating of real estate, and the other is to add a portion of tax revenue to the government and cut a wave of leeks.
However, with the current downturn in the real estate boom, it is really not a good time to implement a real estate tax.
“The implementation now will only make the real estate market colder and even get into trouble.” Zheng Yi said that the current real estate market transaction volume is declining, and the people’s willingness to buy a house is low. The homeowners who have already bought the house feel regret. At the time, if the real estate tax is implemented again to encourage a large number of houses to enter the market, it may cause house prices to fall and enter a vicious circle.
According to Xie Tian’s analysis, in order to avoid taxation, large-scale sales of properties by owners of multiple homes will indeed stimulate the bubble to burst. “People who own more than a dozen homes have to pay hundreds of thousands of taxes each year. This burden is very heavy, so Many people are going to sell and start selling. Once this selling starts, the price bubble in the real estate market will burst.”
The bursting of the housing market bubble has exacerbated loan defaults, causing financial institutions and local government financing platforms to increase risks. “This chain effect is impossible for the CCP to support.” In addition, the Evergrande Group, which has recently had huge debts, will go bankrupt. , Will cause a huge blow to the Chinese economy.
Xie Tian said, “Xi Jinping may not have realized this catastrophic result, but more and more people will warn him now.” In this case, the real estate tax policy that has been disputed for more than ten years will eventually disappear. .
Editor in charge: Gao Jing #
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