Apparently in the past China has never had any sort of property tax. It has experimented with the idea in cities like Shanghai but the Chinese president has now announced his support for property tax that is supposed too "promote common prosperity". According to the article China needs this tax because a lot of people avoid the personal income taxes and their value added taxes are to regressive to be effective. Also this property tax would help homes for being bought and held as second homes as people will be discouraged by the additional taxes. However these taxes will probably be extremely unpopular because who like to pay taxes and also they might feel the government wont spend the tax money well. Another worry is that these taxes wont have the desired effect of lowering prices as the trial of them in Shanghai did not have that effect. It will be interesting to see over time if these taxes work out and have an effect on the market as a whole.
https://www.economist.com/finance-and-economics/2021/10/30/chinas-long-wait-for-a-tax-everyone-loves-to-hate
1 comment:
I agree that the introduction of property would be unpopular because of how previous transactions were carried out - abrupt change is not something people do not like. I don't think doing a single trial in one of China's largest cities is an ideal representation of China's population. The government should've tried this on different tier cities, to get a more representative response from people of different socio-economic backgrounds.
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