China Backs Away from Property Tax in 2013

China may not expand experimental property taxes to more cities in the near future because of inadequate planning and law making, according to an interview with Wang Kang, chief accountant of the country’s State Administration of Taxation, published in the  Shanghai Securities News on Monday.

While the government position has long been that it is conducting “active research” on expanding the existing pilot measures, the comments from the tax office indicate that new administration is backing away from a tax measure that is unpopular with local governments and has yet to produce significant revenue.

In addition to the comments in the Shanghai newspaper, the Economic Information Daily quoted a tax official as saying that it has proved difficult to hammer out a plan for expanding a property tax system.

“Property taxes impact the national economy and people’s livelihood and an expansion needs to be discussed more widely,” Wang Kang, chief accountant of the State Administration of Taxation, was quoted as telling a forum on Saturday.

The trial imposition of taxes has been part of China’s efforts to cool its property property market since 2010 in response to public complaints over runaway housing prices.

Nationwide property tax collection is imperative in the long term but lacks the foundation of necessary legislative work at present, Nie Meisheng, president of the China Real Estate Chamber of Commerce, told the Economic Information Daily.

Present property taxes imposed in Shanghai and Chongqing have not played a significant role in keeping local housing prices in check, according to Gu Yunchang, deputy head of the China Real Estate and Housing Research Association.

For example, the Chongqing trial only covered high-end houses and was too limited in its scale, Zhang Dawei, marketing director of the Hong Kong-based real estate agent Centaline Group, told the paper.

China will accelerate work to expand property tax trials in 2013, Jiang Weixin, minister of housing and urban-rural development, vowed last month.