[Epoch Times October 20, 2021](Epoch Times reporter Lin Yan compiled a report) The Wall Street Journal reported on Tuesday (October 19) that Han Zheng, a member of the Standing Committee of the Political Bureau of the Communist Party of China, advised Xi Jinping not to levy too extensive property taxes for the time being. , The preliminary plans for trial implementation of property taxes in about 30 cities have been significantly reduced to 10.
The report also said that Xi Jinping’s measures aimed at curbing housing speculation across the country are facing resistance within the party. Due to overwhelming negative feedback from the Communist Party of China, a national law on property tax may not be finalized until around 2025.
In the past decade, China has conducted trials on property taxes in several cities. The report quoted people familiar with the matter as saying that earlier this year, Xi Jinping appointed Han Zheng, the most experienced of the four deputy prime ministers, to be responsible for the wider promotion of tax collection.
Han Zheng suggested that Xi Jinping: Don’t levy real estate tax for the time being
People familiar with the deliberations told Huari that for fear of greater impact, Han Zheng has already suggested to Xi Jinping not to levy too extensive property taxes for the time being.
The initial proposal for tax collection in about 30 cities has been reduced to about 10. CCP officials are still arguing about how to determine the pilot tax rate and whether to provide discounts and exempt areas.
They said that the new law aimed at promoting property taxes across the country may not be finalized until around 2025, which is the last year of the five-year development plan.
“Hua Ri” reported that another idea under discussion is to gradually test the property tax plan in large cities, including Shanghai and Chongqing, which have been levying annual fees for second homes or high-priced homes since 2011. Other places under discussion include Shenzhen and Hainan, and Hangzhou City in Zhejiang Province are also expected to join.
Xi Jinping said in an article published in the CPC’s highest theoretical publication “Seeking Truth” on October 16th: “We must actively and steadily advance the legislation and reform of real estate tax, and do a good job in the pilot work.”
“Hua Ri” reported that the article shows that Xi Jinping has accepted the proposal of a trial tax within a limited scope that is not too aggressive.
Party members generally oppose the levy of property tax because of more than one property
A source familiar with the discussion told Huari that during internal debates, the feedback from party elites and ordinary party members on Xi Jinping’s property tax plan was overwhelmingly negative.
Some retired senior party members also petitioned against the new property tax, saying they could not pay any additional taxes themselves.
“Many people, including party members, own more than one property,” one person familiar with the review told Huari, “The tax proposal is becoming a potential social stability issue.”
The Ministry of Finance, the Ministry of Housing and the State Administration of Taxation of the Communist Party of China began soliciting feedback on the property tax proposal in the spring. Many CCP officials said that the annual property tax may suppress housing prices, cause consumer spending to plummet, and seriously damage the overall economy.
The State Council of the Communist Party of China and the press offices of the Ministry of Finance, the Ministry of Housing and the State Administration of Taxation did not respond to Huari’s comment.
“Hua Ri” reported that more than 90% of Chinese urban households own houses, and real estate-related industries account for about one-third of the total economic output. At the same time, up to 80% of Chinese household wealth is tied to real estate, and falling real estate prices may make homeowners feel poorer and less willing to consume.
The alternative is to provide economically affordable housing again by state-owned enterprises
The report said that due to strong opposition from the party, the Chinese Communist government is now preparing to introduce a reduced real estate tax plan, and affordable housing has also become an alternative to be considered.
It is reported that a less controversial alternative within the CCP is to once again allow state-owned enterprises to provide affordable housing.
Based on this idea, China will basically return to the “dual track system” and provide government-subsidized housing and commercial housing at the same time. This means that China has once again returned to the policies of the housing reform period that began in the late 1990s, and resources have returned to government control, and the commercialization of real estate over the years will be further weakened.
Xi Jinping’s recent policy of indifferent to the real estate company Evergrande has caused shock waves in the Chinese economy and the global market. In the past few decades, real estate has become an important driving force for China’s economy, and housing prices have been rising faster than the actual economic growth; however, as the real estate bubble has grown larger, especially in large cities, housing prices have been extremely high, which has far exceeded the income of ordinary households. Scope.
September economic data released on Monday showed that housing sales continued to decline, and banks were also reducing new mortgages. The impact of the real estate squeeze led to a sharp slowdown in China’s economic growth in the third quarter.
Editor in charge: Lin Yan#
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