Chongqing's application to impose a property consumption tax has been approved by the Ministry of Finance (MOF), according to local media reports.
MOF officials said the tax imposed by Chongqing this time is mainly targeted at those who purchase more than one house or houses for commercial use.
The media have reported that the Chinese government will implement a property tax in some trial cities, including Shanghai, Beijing, Chongqing and Shenzhen. Previously, the Shanghai government has said that it is studying some taxes similar to the property tax.
Sun Gang, a MOF researcher said that since the approval of the property tax may take time and need the approval of the National People's Congress (NPC), the tax imposed will be in the form of a consumption tax in some trial cities and it will be easier to implement.
"The property consumption tax will mainly curb housing speculation," he said.
But industry analysts believe that the most effective way to curb real estate speculation is through credit policies, not taxes.
A research report from China International Capital Corporation (CICC) says that since there is enough capital in the market, it is harder to tighten the property industry. The new rules released by the government to rein in excessive property prices gains may see an obvious result, but the new consumption tax may be not so effective since it just aims to curb speculation, not tighten the amount of capital. |
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