The rumors are true: China’s government looks poised to implement a property tax in an attempt to slow the explosive rise in home prices.
Vice finance minister Shi Yaobin said Wednesday that officials are working on a tax, and that Beijing will look at other countries for inspiration.
While property taxes are the primary source of revenue for local governments across the U.S., they are a rarity in China. Two cities, Shanghai and Chongqing, are currently testing property taxes, but only on second homes or luxury properties.
Shi said the new countrywide system could be based on either appraised or market value, Bloomberg reported. UBS Group estimates that it will be implemented no earlier than 2019.
Real estate comprises almost 75 percent of assets for Chinese citizens but is also a factor in some of the largest booms and busts in the country, with investors eager to pour money into housing and mortgage lending skyrocketing over the past two years.
The lack of a property tax dates back to the country’s Communist takeover in 1949, when owning land was at first restricted and then banned. China has also historically had a hard time figuring out who owns what properties, but its Ministry of Land and Resources said in September it had compiled a land ownership database. [Bloomberg] — Konrad Putzier