China has announced trials of a controversial property tax in cities, a decision that pitches Chinese leader Xi Jinping against vested interests spanning an economy driven for years by real estate development, reports the Financial Times.
China’s state council will expand pilot schemes to tax residential and commercial property in cities, according to an announcement by the National People’s Congress on Saturday. The locations were not disclosed but rural households will be excluded.
The reform threatens to be far thornier to implement and affect a greater number of people than a regulatory assault that has been launched over the past year in the world’s second-largest economy. A property tax could alter China’s economic model, reshaping government revenue streams from land sales to taxes and deterring property speculation. Ordinary Chinese people also have concerns given that over 70% of household wealth in the country is tied up in property.
Xi privately instructed economic planners in August to forge ahead with developing a property tax, the next step of his broader “common prosperity” reforms, which are intended to redistribute wealth and “regulate excessively high incomes.”