Type to search

Xi Scaling Back National Property Tax Plan: WSJ

Beijing said to prefer alternative measure involving state-provided affordable housing


Evergrande
Signage for the China Evergrande Centre is seen in Hong Kong. Photo: Reuters.

 

China’s president, Xi Jinping, has yielded to widespread resistance to his proposal for a nationwide property tax aimed at curbing real estate speculation, according to a report on Wednesday.

Xi ordered Han Zheng, a vice-premier, to plan the rollout of the tax, but pushback has scaled down the proposal, The Wall Street Journal reported.

Feedback from both Communist party “elites and its rank-and-file members” has been “overwhelmingly negative”, the WSJ said, citing people familiar with the deliberations.

Beijing now prefers an alternative measure involving state-provided affordable housing, the paper said.

Many analysts have long argued that such a tax could make it more expensive to speculate on property and help bring down prices, the report noted.

China has experimented with a trial property tax in a couple of cities during the past decade.

The moves come as China Evergrande Group, a heavily indebted property developer teeters on default. Other private developers have missed bond repayments.

Home prices have consistently risen faster than actual economic growth, driving more credit into real-estate speculation, the WSJ noted.

Arguments against the tax, which would be levied annually on the value of a property, have flooded in since the ministries of finance, housing and taxation started to seek feedback to the tax proposal in the spring, the WSJ said.

Many officials contend that such a tax could collapse housing prices and cause a plunge in consumer spending.

On Wednesday, official data showed that the price of new homes in 70 cities fell 0.08% in September from August. While only a small decline, it was the first monthly drop recorded since April 2015.

 

• By George Russell.

 

READ MORE:

Evergrande CEO Xia In Summit Talks With Banks And Creditors

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

logo

AF China Bond