[photopress:Fan_Gang.jpg,full,alignright]Fan Gang, member of the Monetary Policy Committee under the People’s Bank of China (PBOC), the central bank, has proposed that property taxes be brought in to restrain real estate speculation and curb rocketing housing prices. Under his proposed scheme owners should pay an annual property tax to the government based on the size of their houses.
Despite government measures most housing in most areas has been increasing at about 10% (and very much more in some places) a year. This despite government policies aimed at regulating the country’s housing supply structure and stabilizing housing prices.
Fan Gang, one of several economists advocating a property tax, said expectations of further housing price rises are fueling speculation in the housing market. Property is seen as a sound investment, and a combination of low interest rates and expectations of currency appreciation have attracted overseas money into China’s real estate sector.
He said a property tax levy would sharply reduce the domestic demand for luxurious houses and limit speculation.
Vice Minister Liu Zhifeng said the Ministry of Construction is mulling over the introduction of taxes and fees for house ownership, so as to support the spread of small and medium-sized houses.
It will come as no surprise that housing developers oppose the idea.
Ren Zhiqiang, president of Huayuan, a leading Chinese real estate company, said that it is not appropriate for the government to first collect funds from developers for the transfer of land use rights, and then levy property taxes for owning commodity houses.