Pundits wag fingers at property tax plan, call it 'illegal'
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As the southwestern municipality of Chongqing is set to heat up the battle to cool sizzling housing prices by imposing a new property tax, analysts questioned the legality and effectiveness of the measure.
Although some industry watchers welcomed the plan as a way to avoid too much local government reliance on land sale revenues, Li Zhanjun, director of the real estate development institute with E-house China R&D Institute, said a levy on individual-use homes is illegal.
"According to provisional regulations on property taxation passed in 1986, prop-erties owned by individuals used for non-business purposes should be exempt from tax," Li told the Global Times.
The industry watcher said any changes from the 1986 regulations should get approved by the National People's Congress and local people's congress as well.
To clamp down on skyrocketing home prices, China rolled out a slew of measures such as limiting the number of house purchases and suspensions of mortgage loans for third homes since late 2009.
However, house prices in China's major cities soared by more than a fifth last year, with Hangzhou taking first place with a 47.1 percent rise and Chongqing second with 37.9 percent gains, according to the China Real Estate Index System.
Yin Kunhua, a real estate professor with Shanghai University of Finance and Economics, said the taxation will put extra pressure on homebuyers. "The tax is supposed to be borne by the middle class," Yin told the Global Times. "And it might take years for the Chinese middle class to take shape."
Another industry official also surnamed Yin - Yin Bocheng, with Shanghai-based Fudan University, said more affordable housing, impose higher taxes on reselling of properties and leaving houses vacant are better options.
The Ministry of Finance may to introduce the tax as early as this quarter, local media said recently.
