Property Tax Changed, The State Council Confirmed Property Tax Reform

The first financial daily news about real estate tax once again hit the stock market real estate sector.

The State Council yesterday approved and promulgated the "opinions on deepening the reform of the economic system in 2010" formulated by the national development and Reform Commission (hereinafter referred to as the "opinion"). This document will "gradually promote the reform of property tax" in the objectives of this year's fiscal and taxation reform.

The capital market immediately responded, the real estate sector plunged sharply in the afternoon, down 3.41%, and the Shanghai Composite Index fell 2.4%, breaking 2600 points.

Property tax instead of property tax

In fact, some of the statements in the opinion have produced subtle changes compared with the past.

Prior to this, the establishment of property tax as a new tax as a housing link tax is the official main idea.

In the goal of fiscal and taxation reform in the 11th Five-Year plan, we clearly stated: "reforming the real estate tax system, steadily implementing the property tax and canceling the relevant fees accordingly."

In last year's opinion on deepening the reform of the economic system in 2009, the expression of tax on Housing Preservation links is "deepening the reform of real estate tax system and studying the Levy of property tax".

In April 17th this year, the State Council promulgated the "ten new countries", and clearly pointed out that the Ministry of Finance and the General Administration of taxation should speed up the study and formulate tax policies that guide individuals to make reasonable housing consumption and regulate personal property gains.

In the opinion, the concept of property tax is clearly put forward.

In fact, property tax has turned into a real estate tax. During this year's "two sessions", the Ministry of Finance submitted and passed the report on the implementation of the central and local budget in 2009 and the draft report on the central and local budgets in 2010.

Wen Laicheng, deputy director of the school of government management and the expert of property tax research, explained that although the property tax is the property tax, there are two differences between the existing property tax and the property tax: the property tax only taxes the operating houses, and the property tax is imposed on all the houses. The tax base of the property tax is the residual value of the property, that is, the original value minus the depreciation charge, and the property tax is collected according to the appraisal value of the real estate. "Wen Laicheng"

The existing property tax is based on the Provisional Regulations on the real estate tax of the People's Republic of China promulgated by the State Council in 1986. It is a tax levied on property owners according to the tax value of the property or the rental income derived from the rental property.

The reason why the property tax has changed to the real estate tax is that the executive organ, the State Council, has lost the tax legislative authorization, while the normal legislative procedure is rather long.

At the seventh session of the Sixth NPC Standing Committee in 1984, the State Council decided to authorize the State Council to draw up relevant tax regulations in the process of implementing state owned enterprises' profits tax reform and reforming the industrial and commercial tax system. In 1985, the State Council authorized the State Council to Formulate Interim Provisions or regulations in respect of economic restructuring and opening to the outside world. The legality of the Provisional Regulations on property tax, which was promulgated and implemented in 1986, comes from this.

On June 27, 2009, the ninth session of the Standing Committee of the Eleventh National People's Congress adopted the decision of the Standing Committee of the National People's Congress on repealing some laws, and decided to abolish the above-mentioned authority from that date.

Liu Huan, Dean of the tax School of Central University of Finance and Economics, said in an interview with "First Financial Daily" that from the present point of view, it is necessary to introduce tax categories for housing preservation. Relevant departments are exploring whether they can bypass the more complicated legislative process and make use of existing taxes and machines to achieve their objectives. The existing property tax is precisely the tax levied on housing preservation.