Property tax can’t be introduced merely for cooling housing prices
After pilot programs of property taxes have been carried out in Chongqing and Shanghai for two years, up to now there are no newly added pilot regions, why the progress is so slow? What are the difficulties of implementing the property tax at the national level? Fu Weigang, the researcher of SIFL Institute, made the in-depth analysis for the above questions in the interviews by Securities Times(Published since 1993, Securities Times is the only official newspaper authorized by the China Securities Regulatory Commission to release news on Chinese listed companies. It mainly reports information and news on China's securities market).
Before answering the above questions, Fu firstly gave his opinions about several relevant problems that often been noted: In the case that house owners do not have the land ownership, is there any legal basis for collecting property taxes? Before the building of a national database of property ownership, is it a kind of nonsense for implementing property taxes? Is it fair for homebuyers to bear a high amount of land-transferring fees shifted from developers and also pay property tax for holding? .
Fu thought that people with such an opinion really worry too much. Because the nature of land-transferring fees is different with that of property taxes, the relationship between the two is not the simple substitutional relation, and they can be completely compatible under the same time. What needs to be made clear is that the land-transferring fees are the money paid to the government by developers when they obtain the state-owned land usage right. Simply the price is rather special, and it is in name of “land-transferring fees.” Besides, it is the government that collects the fees, therefore, many people wrongly thinks that this money is the concentrated collection for the property tax for the future 70 years. But for what we need to pay attention to is that when the government is transferring the lands, it does not exert the public power, and it is engaged in a civil act. In other words, developers purchase lands from the government through bidding, such kind of relationship is not a relationship of administrative law, but is the buying and selling of commodities that occur among equal civil subjects.
Fu further explained that in the current taxation system, property holders only need to pay taxes during transaction, once he buys the house or apartment, he can obtain all the appreciation yields in the future. But people with slight common sense all know that the appreciation of the properties in a region is the result after social development and the promotion of public service quality. If homebuyers do not pay property taxes, it means that the earnings of all public goods are all privatized. But after the property taxes are implemented, there are somewhat changes for such a phenomenon. After the rise of housing prices, house property owners can return a part of earnings to the society in the way of property tax; after the real estate prices decline caused by public facility construction, individuals can share costs to other members of society by the way of paying less property taxes.
At last what needs to be emphasized is that the collection of property taxes is related to the benefits of all property owners, so for the specific tax rates and the collection methods, we not only need to draw lessons from foreign experience, but also need to listen to the opinions of the public. The government should never begin to collect property taxes in a hurry for suppressing the high housing prices, but should introduce the property tax under the overall background of governmental fiscal reforms and the supply of public services. Only like this can the functions of property taxes are given play to.
Back again to the question on promoting property tax in the whole country, Fu stressed that the most important is the real purpose for the promotion of property taxes? Should the new tax be used for suppressing housing prices or providing a stable fiscal revenue source for local governments? If we rashly collect the taxes before we can make clear the problem, there will be quite some problems. In many countries and regions, mostly the income from lands or house properties is the most fundamental fiscal income of a region. For example, in the U.S., the tax revenue that is gained from lands and house properties occupies about three fourths of the fiscal sources of the local governments. In Australia and Canada, the proportion may be even higher. Why do local governments rather favor land or house property taxes? One reason is that the value of real estate is closely related to the public services provided by local governments, and therefore it is perfectly justified that it should belong to the local governments. Therefore, the implement of property tax is the fiscal revenue adjustment between the central government and local governments, and it shouldn’t be introduced just for suppressing housing prices.
