Economy

China to enforce house tax more strictly

(Xinhua)
Updated: 2010-05-27 19:01

A labourer balances on scaffoldings at a construction site in Beijing May 20, 2010.[Photo/Agencies]?

BEIJING: China will collect house- and land-price appreciation taxes more "strictly" after the government released more-detailed tax rules Wednesday, the Shanghai Securities News reported Thursday.

The new State Administration of Taxation circular signals more robust tax-collection after four years of relaxed tax-rules imposition, the daily said.

The circular clarified ways to calculate land value and the appreciation of house- and land-prices.

"The strict collection of land appreciation tax will to some extent curb the windfalls of property developers," the newspaper quoted Zhao Xiao, a professor in economy and management with the Beijing University of Science and Technology, as saying.

Stricter tax-rule enforcement will cool the over-heated real estate market by reducing profits for property developers, Zhao said.

But stricter tax collection may not be effective in bringing down soaring house prices as the measure does not address the problem of supply and demand, Zhao added.

In 2006, the Chinese government released a similar circular on land appreciation tax collection after house prices soared. But it was never strictly implemented and house prices continued to jump, with prices doubling or tripling in big cities like Beijing and Shanghai over the last four years.

The Chinese government is working hard to rein in soaring home prices after they rose by a record 11.7 percent in March this year.

In April, China introduced a series of measures to crack down on speculation in the housing market, including higher down-payments, higher interest rates and a ban on lending for third-home purchases.