Levy differentiated property tax on homes: Chinese think tank

Nov 28 2012, 16:15 IST
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The major conflict for the Chinese property market is structural, with the biggest problems being that home prices are unaffordable. (Reuters) The major conflict for the Chinese property market is structural, with the biggest problems being that home prices are unaffordable. (Reuters)
SummaryThe major conflict for the Chinese property market is structural, with the biggest problems being that home prices are unaffordable.

An official Chinese think tank has suggested that China should levy property tax on homes with area more than 40 square metres per person to ease pressure on real-estate market.

China should expand its pilot property tax reforms beyond Shanghai and Chongqing and levy differentiated property tax on homes, a report titled 'Housing Security in the New Urbanisation Background' released by the state-run Chinese Academy of Social Sciences (CASS) said.

It is reasonable to draw administrative measures to manage the property market at certain stages, but in the long run, economic and market measures should be applied to rationalise citizens' living space, Xinhua quoted the report as saying.

The major conflict for the Chinese property market is structural, with the biggest problems being that home prices are unaffordable and there are not enough low-priced, government-subsidised homes, said the report.

The Chinese government has repeatedly reiterated its stance on property market control and vowed to keep in place tightening measures like bans on third-home purchases, higher down payment requirements and property tax trials.

However, there have been concerns over the cooling property sector's impact on the broader economy, as property investment accounts for about 13 per cent of China's gross domestic output and one-fifth of the country's fixed-asset investment.

Housing sales rose 5.6 per cent year on year to 4.63 trillion yuan (USD 735 billion) in the first 10 months of the year, accelerating by 2.9 percentage points from the January-September period, according to the National Bureau of Statistics.

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