The Chinese government will continue to promote property tax reform as part of general taxation system reform this year, news portal website chinanews.com reported yesterday, citing Minister of Finance Xie Xuren.
"The government will carefully analyze the experience from the property tax reform trials, and steadily push forward with them," Xie recently told Study Times, a newspaper under the Party School of the Central Committee of the Communist Party of China, according to chinanews.com.
China is currently levying property taxes on existing houses in Chongqing and newly built ones in Shanghai as part of a trial program, which could be expanded in the rest of the country in the future.
"Vice Premier Li Keqiang also mentioned the expansion of the property tax trials (last week). I agree with the expansion, because the current purchase restriction policy cannot last for too long," said Gao Jianfeng, a property analyst at Australian investment bank Macquarie Group.
The infrastructure for levying the taxes - such as the housing information network that registers how much a person has paid for their apartment - are complete in most of the major cities, and the only issue now is timing, which is hard to predict, said Gao.
The government enforced purchase restrictions in more than 40 cities, including Beijing and Shanghai, last year, stipulating that families can only buy one apartment. The policy was intended to curb the speculation that has continuously pushed up housing prices over the past two years.
The policy has dampened trading in the housing market. According to the National Bureau of Statistics, housing prices have seen a gradual decline over the last few months.
"We expect prices to fall further in the coming months," Gao and his colleagues wrote in a research note yesterday.
"The laws to support the property tax are not suitable, and I am against the taxation," said Zhong Wei, a real estate professor at Beijing Normal University.
The laws were created in 1985, and were only suitable for commercial properties, not for residential ones, Zhong said.