Real questions aboutu the real estate tax

• Source: Global Times
• [23:12 July 29 2009]
• Comments

Not likely soon

The new tax’s chances of being enacted soon would not be much better even if the land transfer fee was excluded, said some analysts.

Eighteen types of taxes and hundreds of fees are already imposed on new housing, all of which are included in the property prices. Various sections of the government – beneficiaries of the real-estate-related fees – would surely move against the launch of the new tax if it includes the fees and taxes.

Still, some hope that the tax may bring down housing prices.

The argument goes that because the tax would be imposed primarily on real estate investors who own more than one houses, speculators would retreat from the housing market. The prices would decline as the demand goes down and those that want an apartment for personal housing rather than income would better be able to afford it, said Yin of Fudan University.

Jiang Xinguo, a senior analyst and consultant with Shanghai-based Zaihang Commercial Real Estate Consulting, said that the central government would not like to see housing prices drop too much because the real estate industry is still a significant force in the country’s economy.

Jiang added that when the economy recovers, those who have invested in property for security during the downturn will withdraw and that would be a good time to impose the real estate tax.

Others are not optimistic about the tax being implemented in the near future.

Yi Xianrong, a real estate analyst and finance researcher with the China Academy of Social Sciences, believed that the necessary conditions for the tax’s birth do not yet exist.

These conditions include detailed individual housing records, a reliable taxing capability by the government and detailed rules and regulations for the tax.

Dong Fan, director of the real estate research center at Beijing Normal University, said the complications are so vast that the tax might not come into existence for 10 years.