China to expand property tax trial

BEIJING: China is about to expand pilot property tax reforms, state media reported, as the government fights real estate speculation in the world's second-biggest economy.

China's housing market took off after the reforms in 1998 sparked a building boom on the back of rapid urbanisation and wealth accumulation.

As prices went up, so did worries about wealth disparity and the potential for social instability.

The National People's Congress Standing Committee, the top legislature in China, approved the latest plan to promote rational housing consumption, according to the official Xinhua news agency.

Property tax will be levied on all types of real estate, excluding rural homes, under the five-year pilot scheme, according to Xinhua.

Further details, such as its start date and target areas, are expected to be disclosed at a later date.

President Xi Jinping wants to spread wealth more evenly in China, so the announcement comes after President Xi Jinping wants to spread wealth more evenly.

In 2011, authorities started trials in Shanghai and Chongqing targeting high-end private residential properties for taxation.

There have been talks to expand such taxation, but localities have been reluctant, fearing it will drag down property values and dampen demand for land, a key source of local government revenue, state-run tabloid Global Times said Saturday.

China's real estate sector is in troubled waters, with home sales falling 16.9 per cent on-year in September and deeply indebted property giant Evergrande battling a crisis.

Some analysts believe that the latest tax move is intended to prevent prices from rebounding to earlier levels.

Mark Williams, a Capital Economics analyst said last week that a plan was stalled and that the chances of a national tax being implemented are much higher now.

He said that the 25-year property boom is not new and that the correlation between Communist Party membership and ownership of multiple properties is probably fairly high, but he said that the tax from insiders is not new.

Land sales are not a sustainable source of government revenue.