Tax Realty Consultant

China needs to levy property tax: official(BEIJING) China should levy a general property tax to discourage
speculation and rein in runaway real estate prices, according to a
member of the central bank’s monetary policy committee.

Fan Gang’s comments in the latest issue of a Chinese Academy of
Social Sciences magazine echo concerns voiced this week by Premier
Wen Jiabao that China’s soaring housing market must be brought under
control.

‘Realty investors don’t care whether their houses can be rented out
or not,’ Mr Fan said in an interview. ‘If a continual and
incremental tax is imposed on real estate, investment in the sector
will cool down.’

Mr Fan, one of China’s best-known economists, has previously called
for an annual tax on homeowners based on the value of their property
but had previously said that technical obstacles stood in the way.
His latest comments described the reforms as urgent.

‘Demand will continue to expand unchecked if realty investors are
not required to pay anything to compensate for the housing price
hike,’ he said.

China has adopted a number of measures to cool the real estate
sector, such as increasing capital gains taxes on property and
tightening land-use rules.

But property prices have resumed their surge, up 9.5 per cent year-
on-year in October and even more in major cities, after briefly
calming earlier in the year.

Mr Fan, who is also director of the National Institute of Economic
Research, added that authorities must crack down on insider trading
and illegal loans in the stock markets, or ‘the consequences will be
unthinkable’.

However, he was optimistic about China’s potential for stable growth
at around 11 per cent a year, saying that the country would continue
to benefit from low labour costs, a high savings rate, capital
inflows and advances in education and technology.

The challenge, he said, was for China to fix its economic problems
from its current position of strength, so that it would be better
able to withstand international financial crises.

He also said that the profitability of Chinese businesses was
exaggerated because of artificially low resource prices, tiny social
security outlays and lax environmental rules.

http://sgpropertynews.wordpress.com/2007/11/23/business-times-china-needs-to-levy-property-tax-official/