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Tuesday, October 12, 2010

Property tax likely to be launched soon

BEIJING: China will soon start to levy a property tax on a trial basis to curb speculation and contain housing inflation, an industry group said yesterday.

Talk about a property tax has swirled in China for many years and has weighed on the domestic stock market this year amid signs that the government was about ready to implement such a levy.

“It will be launched within months, not in years,” Nie Meisheng, president of the semi-official China Real Estate Chamber of Commerce, told a forum.

The central government said at the end of September that it would accelerate efforts to launch a property tax trial, though it gave no details.

He Ken, deputy head of the economic committee of the National People’s Congress, China’s largely ceremonial parliament, told the same forum that the tax rate would be higher on bigger homes and that homes below a certain size would receive exemptions.

“Imposing a property tax is a major way to curb speculation,” Mr He said. “All other measures are unable to help China fundamentally solve the housing problem.”

The municipalities of Shanghai and Chongqing have already submitted proposals to the central government for how to design a property tax. Nie said China would experiment with multiple alternatives in the trial stage.

China unveiled a battery of policies to cool its real estate market earlier this year and reinforced them at the end of September with a move to raise downpayments on some home purchases.

There had been signs of a pick-up in property transactions and prices in recent weeks but the latest steps appear to have taken the wind out of the market’s sails.

“A rebound in housing prices is unlikely this year,” Nie said.

By Reuters

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