A leading economist has proposed that the Chinese government collect property taxes and real estate transfer taxes to rein in speculative investment and ward off a possible financial crisis.
Owners should pay an annual property tax according to the size of their homes and the government should collect transfer taxes to redistribute profits generated by rising home prices, said Lin Yifu, director of the China Economy Research Center of the Peking University.
Since the government had adopted macro-controls over the real estate market last year, increasing investment and price hikes had slowed slightly, but rising prices in some big cities, imbalance between supply and demand and poor market regulation remained.
Property was still seen as a sound investment in some circles, while a combination of low interest rates and expectations of currency appreciation had sucked in overseas money to China's realestate sector.
Lin told a seminar in Dalian, northeast China's Liaoning Province, that if speculative demand continued, property prices would surge beyond the reach of the vast majority of people and businesses, leading to a market bubble and financial crisis.
(Xinhua News Agency August 1, 2006)
