The top decision-making body of the Chinese parliament has announced plans to roll out a pilot real estate tax in some regions, the official Xinhua news agency reports.
China’s long-mooted – and long-resisted – property tax has gained new momentum as President Xi Jinping threw his support behind what experts say would be one of the most profound changes to the country’s real estate policies in a generation.
A tax may finally tame the country’s red-hot home prices, which have soared more than 2000 per cent since the privatisation of the housing market in the 1990s in a fast-urbanising China.
In recent years surging property prices have created an affordability crisis, especially among millennials.
But talk of the plan is coming at a sensitive time, as the property market is showing significant signs of stress and home prices have started falling in some areas.
The real estate tax will apply to residential and non-residential property as well as landowners, but does not apply to certain legally owned rural homes and residences, Xinhua said.
The pilot schemes will have a duration of five years from the issue of the details from the State Council.
The idea of a levy on home owners first surfaced in 2003 but has failed to take off due to concerns it would damage property demand and tank home prices, hurting household wealth and future real estate projects.
It has also faced resistance from stakeholders including local governments, who fear it would erode property values or trigger a market sell-off.
In pilot programs rolled out in 2011, the megacities of Shanghai and Chongqing have taxed homeowners, albeit just those possessing higher-end housing and second homes, at rates from 0.4 per cent to 1.2 per cent.