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Significance of Property Tax

Feb 22-2019   



In his recent article for People’s Tribune, affiliated with People’s Daily, NSD Prof. Lin Shuanglin examined the viability and significance of the much-debated property tax. What’s in focus is a potential tax on real estates owned by Chinese residents and not in business use. Prof. Lin said that property tax was a major revenue source for local governments and was levied by many developed and developing countries alike. He cited researches showing that property tax had the least negative impact on economic efficiency. According to an OECD research, property tax accounted for 10.8% of the UK government revenue in 2014, 8.4% in the US, 8.2% in South Korea, 7.4% in Japan, 7.3% in France, and 1.3% in Mexico. Local governments in China lacked a mainstay tax and already posted a heavy fiscal deficit. Total housing value of Chinese residents reached 212% of China’s GDP in 2014, significantly higher than the US’ 132.18%. The continuous spike in housing price had favored real estate investment over industries and put young people at great disadvantage, said Prof. Lin. He argued that the implementation of property tax would channel more capital into industries, improve tax system and increase local government revenue, as well as improve income distribution and drive down housing price. The income from property tax should be used to provide compulsory education and other public goods, and upgrade infrastructure, he said. At the same time, it’s important to ensure transparency and to reduce other taxes.

 

Significance of Property Tax

Feb 22-2019   



In his recent article for People’s Tribune, affiliated with People’s Daily, NSD Prof. Lin Shuanglin examined the viability and significance of the much-debated property tax. What’s in focus is a potential tax on real estates owned by Chinese residents and not in business use. Prof. Lin said that property tax was a major revenue source for local governments and was levied by many developed and developing countries alike. He cited researches showing that property tax had the least negative impact on economic efficiency. According to an OECD research, property tax accounted for 10.8% of the UK government revenue in 2014, 8.4% in the US, 8.2% in South Korea, 7.4% in Japan, 7.3% in France, and 1.3% in Mexico. Local governments in China lacked a mainstay tax and already posted a heavy fiscal deficit. Total housing value of Chinese residents reached 212% of China’s GDP in 2014, significantly higher than the US’ 132.18%. The continuous spike in housing price had favored real estate investment over industries and put young people at great disadvantage, said Prof. Lin. He argued that the implementation of property tax would channel more capital into industries, improve tax system and increase local government revenue, as well as improve income distribution and drive down housing price. The income from property tax should be used to provide compulsory education and other public goods, and upgrade infrastructure, he said. At the same time, it’s important to ensure transparency and to reduce other taxes.