Will China roll out nationwide property tax in 2019?
China's real estate market seems to have cooled down after years of boom, with growth of housing prices dipping to its lowest in nearly a year in the first two months of 2019, according to official data.
As potential home buyers adopt a “wait-and-see” attitude, a key issue they are concerned with is when China will roll out a nationwide property tax system, which will be a crucial factor impacting the country's massive property market.
The country has mulled over property taxes for over a decade, with speculations of its implementation surfacing every few years. So will the wolf finally come in 2019?
During the just-concluded Two Sessions, China's annual political season, property tax has been one of the hottest issues concerning the public, as clearer signals were sent out by several high-ranking officials.
Property tax legislation prioritized
On March 8, Li Zhanshu, chairman of the Standing Committee of the National People's Congress (NPC), China's legislature, said in a work report that the country will “focus energy” on effectively implementing major legislative items this year, including a property tax.
He said the NPC will ensure that all legislative plans are completed on schedule, without giving a detailed timetable.
In this year's government work report delivered by Chinese Premier Li Keqiang on March 5, the property tax was mentioned for the third time after 2014 and 2018, and in stronger words.
It said that China will “steadily push forward property tax legislation,” while the wording in the 2018 report was “prudently.” Analysts have interpreted it as a signal for the acceleration of the property tax legislation.
A draft law “steadily advancing”
On March 9, deputy director of the NPC's Legislative Affairs Commission Liu Junchen confirmed at a news conference that work had started on the property tax law.
"The relevant side is now studying the drafting of the real estate tax law, and relevant work is steadily advancing," Liu said.
Deputy director of the NPC's Finance and Economic Committee Uzhitu added that the tax was being drafted by the NPC's budget committee and the Finance Ministry.
At present, relevant departments are perfecting the draft law and discussing "important issues" related to it, he said.
"When the conditions are ripe, it will be submitted to the Standing Committee of the National People's Congress for initial review," he added.
Some experts predicted that a draft law would be completed and submitted to the Standing Committee of the NPC for review in 2019, which means its implementation may come sooner than expected.
Local governments to have great say
Besides when the tax will be rolled out, another key issue is how it will be levied.
In one of the latest and most detailed official comments on how the long-mooted tax could be implemented, Yin Zhongqing, deputy director of the financial and economic affairs committee of the NPC, said on March 14 that local governments would be allowed a large degree of autonomy regarding when it is levied and at what rate, as "property tax is a local tax."
The central government will set a few tax rate brackets for local governments to choose from, Yin was quoted as saying, with the tax to be levied at current property values.
All in all, there seems to be a consensus that China is stepping up efforts on the introduction of the property tax. However, it's still difficult to tell how soon it will come out.
In a few days, experts and market insiders attending this year's Boao Forum for Asia in south China's Hainan province will further discuss the future of China's real estate market. Stay tuned to CGTN for the latest insights.