Fourth, Behind The Reform Of Real Estate Tax: From The System Design To The Pilot Promotion, The Day When The Situation Will Be Broken Is Near

On May 11, the Ministry of Finance announced that the responsible comrades of the Ministry of finance, the budget Working Committee of the Standing Committee of the National People's Congress, the Ministry of housing and urban rural development and the State Administration of Taxation presided over a forum on the pilot work of real estate tax reform in Beijing, and listened to the opinions of the responsible comrades of the people's governments of some cities and some experts and scholars on the pilot work of real estate tax reform.

Although it is only a few words, but combined with the current policy background, it contains a very rich amount of information.

Since the beginning of this year, the regulatory authorities have mentioned the real estate tax directly for three times and indirectly for another time. Such intensive statements seem to mean that the real estate tax is getting closer and closer. In fact, from the policy statements in recent years, the real estate tax has long been separated from the simple real estate regulatory framework, and has risen to the level of improving the local tax system and income distribution, and its policy framework and promotion level have also been significantly improved.

Analysts believe that some details of the news also reflect that the real estate tax has progressed from the system design stage to the pilot stage. For example, the reform pilot work has already started, and some cities are pushing forward. The intervention of the budget Working Committee of the Standing Committee of the National People's Congress seems to indicate that the legislative work has made progress.

The complexity of real estate tax reform can be described as "leading the whole body", which is also the reason for the slow progress of this work in the past years. Now, the real estate tax reform of the day, seems to be gradually approaching.

The change of connotation

The reform of the real estate tax system began in 2003. The decision of the CPC Central Committee on Several Issues concerning the improvement of the socialist market economic system adopted by the Third Plenary Session of the 16th Central Committee of the CPC pointed out that "to implement the reform of urban construction tax and fee, unified and standardized property tax shall be levied on real estate when conditions permit, and relevant charges shall be cancelled accordingly."

At that time, the so-called "property tax" refers to the tax on housing ownership, which is very similar to the later "property tax".

The relevant departments have started the pilot project of real estate tax assessment in 2003, that is, the pilot project of property tax "idling". By 2010, the pilot project has been launched nationwide. According to the requirements of the Ministry of Finance and the State Administration of Taxation, all provinces and autonomous regions have selected a city for the pilot project.

On July 22, 2010, at the seminar on local tax reform held by the Ministry of finance, relevant people said that the pilot project of real estate tax will be implemented in 2012. However, in view of the difficulty of nationwide implementation, the pilot project will start from individual cities. On January 28, 2011, Shanghai and Chongqing simultaneously announced the launch of a real estate tax pilot to levy property tax on individual housing.

But since then, the scope of the pilot cities has not continued to expand. With the passage of time, the attention of the outside to the pilot projects in the two places has also begun to decline.

At the end of 2013, the Third Plenary Session of the 18th CPC Central Committee issued the "decision of the CPC Central Committee on several major issues of comprehensively deepening the reform", and proposed "accelerating the legislation of real estate tax and promoting the reform in a timely manner"“ The concept of "real estate tax" came to the surface. Nowadays, "promoting the legislation and reform of real estate tax" has become the key work of the regulatory authorities.

On December 23, 2020, Liu Kun, Minister of finance, published an article "establishing a modern fiscal and taxation system" in people's daily, saying that the legislation and reform of real estate tax should be actively and steadily promoted in accordance with the principle of "legislation first, full authorization and step-by-step promotion". The article thinks that through the legislation and reform of real estate tax, the direct tax system can be improved, and the proportion of direct tax can be gradually increased, so as to achieve the function of regulating income distribution.

At the same time, considering the current trend of the real estate market, the role of this work in real estate regulation can not be ignored. On March 23, 2021, Han Zheng, member of the Standing Committee of the Political Bureau of the CPC Central Committee and vice premier of the State Council, held a forum on fiscal and taxation work at the Chinese Academy of financial sciences. Han Zheng stressed the need to strengthen the study of macro policies, especially fiscal and tax policies. The current focus should be on achieving carbon peak and carbon neutralization, improving the regulation and control of the real estate market and promoting the healthy development of the platform economy.

Just one week before the Forum on May 11 and May 6, Liu Kun published the article "establishing and improving a modern financial and taxation system conducive to high-quality development". After half a year, Liu Kun once again stressed the need to actively and steadily promote the legislation and reform of real estate tax, which means that the legislation of real estate tax is imperative.

Therefore, the connotation and extension of real estate tax reform are further enriched, the policy framework is more grand, and the level of work promotion is also significantly improved. Analysts believe that this also provides convenience for the legislation and reform of real estate tax.

The propulsion speed is expected to accelerate

In fact, because of the complicated types of taxes involved, more departments to be coordinated and the basic preparation work to be improved, in recent years, the promotion of real estate tax reform often gives the impression of "intermittent" to the outside world.

In the government work reports of the NPC and CPPCC in the past five years (from 2017 to 2021), only 2018 and 2019 mentioned "real estate tax legislation", and other years did not mention it.

But in recent months, it has become clear that regulators have become more frequent. Before the forum, the government has mentioned "real estate tax" four times this year

On March 13, the "14th five year plan" and the outline of the long-term goal in 2035 were released, and "promoting the legislation of real estate tax" was written into it. On April 7, Wang Jianfan, director of the tax administration department of the Ministry of finance, said at the press conference of the office of the State Council of the people's Republic of China, actively and steadily promote the legislation and reform of real estate tax. In an article published on May 6, Liu Kun said that the key work during the "14th five year plan" period included "promoting the legislation and reform of real estate tax".

This work was mentioned indirectly at the Forum on fiscal and taxation work in March this year.

For the forum held by the Ministry of Finance on May 11, a number of interviewees told the 21st century economic report that the information revealed by them showed that the real estate tax had progressed from the system design stage to the pilot promotion stage, and pilot projects were launched in some cities. This is the first time that the government has announced the progress of this work after two years.

The four departments participating in the meeting are the main executive departments of this work. Among them, the intervention of the budget Working Committee of the Standing Committee of the National People's Congress shows that the legislative work is advancing.

According to the principle of "legislation first, full authorization, step-by-step", legislation is the key node of real estate tax.

As early as 2015, the real estate tax law was written into the legislative plan of the people's Congress of that year. Since then, the real estate tax law has been listed as a "preparatory project" in the legislative work plans of the Standing Committee of the National People's Congress in 2016, 2017 and 2018. However, there is no real estate tax involved in the annual legislative work plan after 2019.

A researcher from a research institute under the Ministry of housing and urban rural development told the 21st century economic report that as early as 2018, the draft of the real estate tax law had been formed and solicited opinions internally, and it was once listed in the "first category project" in the legislative planning, namely "the draft law with mature conditions and to be submitted for deliberation during the term of office". In addition, the real estate registration information management platform has been realized nationwide, providing data support for the collection of real estate tax. Therefore, the basic conditions of real estate tax legislation have been gradually met.

As for the reason why the legislation has not been pushed forward, he thinks that it may be because the preparatory work in the early stage is rather complicated and there are many pieces of relationship that need to be straightened out. At the same time, regulators need to find the right time.

Xu Xiaole, chief market analyst of Shell Research Institute, also believes that at present, there are not many challenges in the legal basis and technical means of real estate tax, but it is difficult to find an appropriate time to issue the real estate tax among the challenges of many major events at home and abroad, so as to ensure that the introduction of the policy will not cause excessive impact on the market expectations.

He told the 21st century economic report that the possible challenges are higher tax costs due to rising real estate prices and inadequate understanding of household property information“ With the spiral rise of housing prices and residents' debt, more and more, the land prices and housing prices deviate from the real income level of residents, and the tax is more and more reflected in the tax on asset prices, which makes the actual payment pressure of residents rise sharply

However, respondents generally believe that from the perspective of recent policy trends, the pace of real estate tax legislation and reform is expected to accelerate. One possible way is to expand the pilot cities first, and then to sort out the levy situation and actual effect of the pilot cities, so as to provide reference for the legislative work. Xu Xiaole believes that Shenzhen began to implement the official guidance price of second-hand housing, which essentially belongs to the evaluation price of the government, which makes a preliminary exploration for the determination of the real estate tax base.

?