Time for China to tax property
By Dang Guoying (China Daily)Updated: 2007-03-14 10:50
For example, property tax can be collected to cool down individual housing
speculation. But if enterprises are not taxed, individuals could transfer their
personal properties to companies to evade taxation.
It is said that
families would be taxed according to the floor area of their homes. This has
aroused much criticism. The floor area of many rural homes is much bigger than
those of urban residents and a 100-square-meter home outside the Fifth Ring Road
in Beijing costs less than a 30-square-meter one in the downtown area. Should
rural residents pay more? Should the owners of bigger houses pay more tax?
From the angle of resource conservation, it is necessary to collect
property tax on land. At present there is only the land use right transfer fee,
no property tax.
To impose property taxes on land will increase the cost
of accumulating land and help curb land speculation. But according to our
current economic system, there is no basis for collecting property tax on land
because rural land is collectively owned and urban land belongs to the State.
This seems to be a predicament, which indeed shows the defect in our
land system. So, in my opinion, it is essential to reform the land system before
introducing the property tax.
Once the taxable holdings include factory
buildings and land, it would be even more ridiculous to tax only according to
the area.
Then there is the question of how to measure property values.
The self-reporting method adopted by many Western countries is a good one.
Enterprises normally would not underreport their property value because there
are related mortgage loan issues.
Families would not underreport the
value of their property because of the possibility of government buy-outs.
Should the government need to demolish their homes, they would not want to be
paid an undervalued price.
The author is a researcher with the Rural
Development Institute at the Chinese Academy of Social
Sciences
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