[photopress:real_estate_shanghai_1_2.jpg,full,alignright]A State Administration Taxation official has dismissed market rumors that the property tax levy is likely to start within the year.
Basically what he said was the it could not happen in a hurry because the departments concerned were not connected and thus unable to administer the tax.
The official said previous reports that the central government would start to collect the tax before June were wrong
The Guangzhou Daily quoted this unnamed official as saying: ‘The levy will not start in the next two years. The property tax involves too many issues to be dealt with easily.’
At the end of last year Liu He, vice-minister of the Office of the Central Leading Group of Financial and Economic Affairs, suggested the levy would start in pilot areas in 2008. From this started the concern over an immediate implementation of the property tax.
It is known that preparations for the introduction of the property tax started early in 2003. It was seen as part of a systematic tax adjustment aimed at unifying the current housing property tax, urban real estate tax, land value-added tax and land-leasing fees under a single name.
If the land-leasing fees, which constitute a key component of property prices now, become part of the property tax, which would be spread more evenly to 40 to 70 years after the purchase, housing prices will be reduced significantly.
However, the official explained, basically what it was about was inter-departmental lack of connectedness.
He said, ‘At present the tax, financial and real estate departments are not completely connected, we cannot even effectively communicate our information through the network, let alone levy a property tax that involves all the three systems.’
Source: Shanghai Daily