From the Readers

Property tax sound but needs more consideration

(chinadaily.com.cn)
Updated: 2010-05-13 10:56

Comment on "Taxman targets multiple-home owners" (May 12, China Daily)

The concept of a property tax is sound in that it will force people to see their real estate holdings as an investment rather than a gamble that the real estate prices will keep on rising. To have a carrying cost on your property will make people think twice before committing so much money to this type of investment.

On the other hand, the concept of a property tax is supposed to be a tax on the land as well as the property that the land is on. As Chinese do not have outright ownership of land, it is a concept that will require some careful wording by the authorities who draft the new law. If a property owner has already leased the land on which the property is on when he purchased the property, then would this not be considered double taxation?

Finally, what will the new money raised by this tax be used for? In the West, when we pay our annual property taxes, we know that it is used to support our local school district, roads, public utilities and other things that the populace of the tax district needs. As an additional source of revenue for the government, will these funds be used to improve the schools, medical care or other public uses in a transparent way or will it go to government coffers and the taxpayers will see no visible benefit other than the government's attempts at cooling down property prices and speculation?

James, on China Daily Website