BEIJING: China is likely to introduce a nationwide property tax as early as next year following trial runs of using a different tax model in Chongqing and Shanghai, according to China Economic Net.
Property taxes have been levied on home owners on a trial basis in Shanghai and Chongqing since 2011. Although the Chinese government had originally planned to include Hangzhou, Guangzhou and Shenzhen into the pilot tax model, it later decided to suspend the plan. Instead, the government pushed for legislation of a new nationwide property tax law.Unlike the trials in Chongqing and Shanghai where the property tax was levied on houses only, the planned national property tax will target houses as well as land.
The legislative process will commence in 2015, and if the wording is completed by 2016 it will officially come into effect in 2017.The government decided to discard the current pilot property tax model in Chongqing and Shanghai due to mixed reviews it received and controversies surrounding its effectiveness. It was widely believed that due to the scheme, local government’s increased their tax revenues but failed to curb soaring home prices, according to the report.
In March of this year, during China’s annual legislative meetings, Xu Shanda, former deputy director of the State Administration of Taxation, said that the pilot property tax system in the two cities failed. This prompted the government to discard the current tax model and move ahead with drawing up a new one.
The new tax will combine several existing taxes, including property-related taxes, corporate and individual income taxes, land-use and land value-added taxes, and a stamp tax.
