BEIJING, April 25 China should expand property
ownership taxes to more cities instead of imposing a 20 percent
capital gains tax on transactions if it wants to prevent a steep
rebound in home prices this year, a top state think-tank said on
The Chinese Academy of Social Sciences (CASS) said the
transaction tax could have the side-effect of raising home
prices as home sellers have tended to transfer it to buyers.
"If the 20 percent capital gains tax is strictly enforced,
we think overall home prices might have relatively big gains
(this year)," Li Enping, a researcher at CASS, told a media
"If the focus of policy enforcement turns to raising
property ownership taxes, home prices might keep a stable trend
or even drop slightly," Li said.
China's home prices have seen a upswing since around the
middle of last year and new home prices rose 3.6 percent in
March. This forced the government to launch a
fresh round of measures last month, including the 20 percent
levy on pre-owned home sales.
But strong housing demand is helping home sellers transfer
the tax to buyers, which in turn will push up existing home
prices. There is no official sanction on sellers if they
transfer the tax, while many cities have yet to say how they
plan to enforce its collection.
To be effective, property transaction taxes would need more
detailed work on how they could curb speculation without hurting
genuine buyers, CASS said. Many prospective buyers could turn to
the new home market to avoid the tax, thus also fuelling prices.
Its remarks come after domestic media reported that Shenzhen
and Hangzhou could launch property ownership taxes, though this
has not been confirmed by taxation authorities in either city.
The cities of Shanghai and Chongqing were the first in China
to enforce property ownership taxes, which are paid annually, in
2011, but the measures covered few properties and at less than
1.2 percent were seen as too low to be effective.
(Reporting By Xiaoyi Shao and Jonathan Standing; Editing by