Property tax legislation moving forward, though slowly

BEIJING - China's long discussed and often stagnated property tax plan has once again come under the public spotlight following its inclusion in the national legislation plan this week.

The Standing Committee of the National People's Congress (NPC), China's legislature, included a property tax law in its legislation plan, signalling lawmakers' determination to push ahead with the reform, although progress has been extremely slow.

"Conditions to enact these laws are ripe," said the Standing Committee website. "The 12th NPC plans to review them within its tenure [which ends in early 2018]."

Prof. Shi Zhengwen of fiscal and financial law at the China University of Political Science and Law expects the law to be passed by the end of 2017.

But the passing of the law does not necessarily mean it will be put into effect right afterwards, analysts said, citing the timing and specific clauses in the law as possible obstacles for its implementation.

The coverage, tax rates and possible exemptions for houses under a certain size are among the most debated topics that need a serious balancing of interests, insiders involved in the legislation said.

China's current housing tax mechanism mainly taxes development and sales of a property, without taxing home ownership or the market value of homes.

The low cost of holding property has led to speculation as investors tend to purchase multiple houses and hold them off the market in hopes of further appreciation, which has fuelled price rises in major cities already wrestling with tight supply.

As part of efforts to cooling the property market amid growing public complaints over runaway housing prices, China introduced a trial property tax in cities like Chongqing and Shanghai in 2010.

The Chongqing tax tryout focused on high-end housing while the Shanghai method mainly targeted ownership of multiple houses.