BEIJING: A senior official with China's powerful planning agency has confirmed media reports that the country is studying a possible nationwide property tax, but has no specific plan, China Business News reported yesterday.
It also said Shanghai was considering introducing the tax in the city on a trial basis. Previous media reports that China could expand the property tax, now levied on commercial property, to cover the residential sector have driven down the Shanghai Composite Index by over 20 per cent this year.
The newspaper, citing an unnamed senior official at the National Development and Reform Commission, said there was no timetable yet for any expanded tax rollout. The official said China encouraged trials by local governments to launch the tax but added there was no specific plan for a nationwide programme.
China introduced fresh steps to curb excessive housing price rises in some cities in April, including higher downpayments and mortgage rates. These measures have driven down the number of transactions but prices have remained near record levels.
Most developers are postponing project launch dates and are waiting to see market developments before pricing new projects. Real estate prices rose a record 12.8 per cent in April from a year earlier, the National Bureau of Statistics said on May 11.
'The government should have put in tougher enforcement earlier to prevent the high prices,' said Mr Lu Qilin, a Shanghai-based researcher at property consultancy UWin. 'If the government doesn't stop this soon, the bubble will burst.'
Source: Straits Times, 4 Jun 2010