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.