| Property tax on large flats raises host of tough issues |
SHANGHAI, Jan. 27 -- The likelihood of an annual property tax on high-value apartments is picking up pace, given recent comments by government officials.
Opinions among industry experts are mixed, however, on whether the tax can be fairly implemented.
"The new policy, targeting large apartments, has obviously been given priority in the work schedules of some government departments," said Professor Yin Kunhua, former head of the real estate research center at the Shanghai University of Finance and Economics. "But it may take quite some time and effort for the government to unveil workable schemes because they would affect a very considerable number of apartment owners."
At a work conference this week, Ministry of Construction chief Wang Guangtao reemphasized that the central government intends to require owners of large apartments to pay an annual levy on the value of their homes at some point in the future.
Earlier last month, Liu Zhifeng, vice minister of the construction ministry, said his agency and the Ministry of Finance have already started discussing the tax.
The assessment is likely to be levied only on large apartments, as the government is trying to encourage people to buy small and medium-sized flats, Liu said, without elaborating.
The fee would probably range between 0.1 percent and three percent of the home's value, experts said.
Yin emphasized that some important questions must be answered before such a tax can be implemented.
"Among them, the ownership of land and property and the definition of a luxury apartment could be the biggest obstacles," Yin said.
Yin explained that in most developed countries where a property tax is levied, the residence and the land are owned together, while in China, the land is owned by the government and the structure is owned by apartment buyer.
Moreover, the definition of a luxury apartment may prove difficult. Experts speculate that such apartments could range anywhere from 90 square meters to 144 square meters or more.
"It would be rather unfair to impose the same tax on a large apartment shared by a two-generation or three-generation family and an empty one bought by a speculator," Yin said.
Some industry analysts question whether the scheme will ever come to fruition.
"I don't think this type of property tax will be levied, at least in the short term," said an analyst with a local real estate agency who declined to be identified, citing similar concerns over the land ownership problem. "And this new policy would arouse debate among both home owners and industry experts and therefore very likely will be postponed or revised."
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