Is property tax really coming?
On April 7, 2021, Wang Jianfan, Director of the Finance and Taxation Department of the Ministry of Finance, said that real estate tax legislation and reform should be actively and steadily promoted.
In the past, the Ministry of Finance had always been involved in speaking out about property tax, but on May 11 this year, the Ministry of Finance and other four departments held a symposium on the pilot work of real estate tax reform in Beijing. The Budget Working Committee of the Standing Committee of the National People's Congress, the Ministry of Housing and Urban-Rural Development, the State Administration of Taxation, and the Ministry of Finance all participated.
Different from the "active and steady advancement" mentioned before, this meeting listened to the opinions of some city responsible comrades and some experts and scholars on the real estate tax reform pilot, and can also better promote the implementation of real estate tax.
The rise in house prices in recent years has made the gap between those who own houses and those who do not have a house wider and wider. Everyone also hopes that the introduction of the real estate tax will reduce the investment properties of houses and stabilize house prices.
Not only that, the introduction of the real estate tax will also help increase fiscal revenue and establish an effective regulation mechanism for property management.
In terms of increasing fiscal revenue, real estate tax is not levied at the purchase stage like stamp tax, but at the stage of holding existing houses, and it is levied every year. After the property tax is levied, local fiscal revenue is expanded, which can reduce the high dependence of some cities on land finance and reduce the transmission effect of land prices on housing prices. Building bridges, building roads, constructing elderly care facilities, increasing the supply of affordable housing and other livelihood facilities all require the support of fiscal revenue. The introduction of the real estate tax can increase tax sources and be used to improve the lives of low-income people.
In terms of the impact on the property market, after the introduction of the real estate tax, the holding cost of multi-house owners will be increased. When housing prices are rising rapidly, everyone may not be sensitive to the fact that landlords add the burden of property taxes to the housing prices. However, when housing prices are stable, it becomes difficult for landlords to add the burden of property taxes to the housing prices and sell at a higher price. . After several years of regulation, the overall price growth of my country's property market has returned to stability. The introduction of a property tax at this time can further improve the long-term regulation mechanism.
Property tax has been mentioned many times, does it mean that property tax is coming?
The 14th Five-Year Plan mentioned that real estate tax legislation should be promoted.
In May 2021, Minister of Finance Liu Kun wrote an article in the Economic Daily and also proposed that real estate tax legislation and reform should be actively and steadily promoted. The word "active" indicates that the property tax is under serious consideration by relevant departments, while the word "steady" indicates that the property tax needs to comprehensively consider its impact on all aspects and will not come quickly.
Some experts believe that preparations for property tax are insufficient and the best time has not yet arrived. However, economist Jia Kang believes that property tax cannot be delayed and there is no so-called best time. Chongqing and Shanghai have been trialing property taxes for 10 years. Although housing prices in these two places have increased significantly compared with 10 years ago, without the impact of property taxes, housing prices may have increased even higher.
At the end of 2020, the Academy of Social Sciences proposed in a report that property tax recommendations would be introduced during the 14th Five-Year Plan period. As a research institution directly under the State Council, the Academy of Social Sciences’ recommendations are very theoretically based and of practical significance.
Ma Guangyuan also believes that the 14th Five-Year Plan period is a good time to introduce a property tax. Therefore, industry insiders generally believe that during the 14th Five-Year Plan period, it is more likely to levy property taxes.
What will the property tax tax standards be like?
In countries that have already levied property tax, the property tax rate is concentrated between 1% and 4%. For example, the tax rate in the United States is 1% and 3%, and the tax base is 20% and 100% of the assessed value of the real estate. France's real estate tax tax rate is 3%, and the tax base is the open market value. South Korea also uses the assessed value of real estate as the basis for taxation, with a tax rate of 0.6% to 4%.
Data source: Zhongzhi Research Institute
It can be seen that the basis of foreign property tax is the assessed value. If house prices rise, taxes will also increase, which can stabilize the property market.
What will be the collection standards of property tax in my country? Experts propose exempting area and tax rates.
Many people are concerned about whether there is exemption area for property tax. If there is no exemption area and a house with 50 square meters for one person is still taxed, the financial pressure on low-income people will increase. If an elderly couple lives in a house of 60 square meters and one wife dies first, does the remaining elderly person need to be taxed? Just like there is an exemption for everyone's salary income tax, if the property tax also has an exemption area, it can reduce people's tax burden.
Finance and taxation scholar Zhang Xuedan believes that regarding the exemption standard , we can refer to Shanghai. Shanghai’s exemption area standard is 60 square meters per capita. It is recommended that the area for property tax exemption can range from 40 to 60 square meters. Regarding the tax rate, he suggested that it could be in the range of 0.2% to 1.2%.
Compared with the property tax rates in the United States and France, 1.2% is a relatively low level.
If calculated based on the exempt area of 60 square meters, the tax rate of 1.2%, and the national average house price of 10,000 yuan, a family of three holds three apartments, the total housing area reaches 500 square meters, and the excess area is 320 square meters. According to this 320 If you collect tax per square meter, you need to pay 38,400 yuan per year.
If a family of three lives in a house with a total area of 120 square meters and does not exceed the exemption standard, no tax is required.
Judging from the content of real estate tax, those who hold multiple suites and have too large per capita area may have to worry, because once the real estate tax is introduced, they will have to pay tens of thousands of yuan in real estate tax every year, which is still a lot of pressure.
What do you think about the exempt area and tax rate proposed by experts?
