What kind of signal will the real estate tax legislation be suspended?

Some experts pointed out that the stability of the property market is the current focus; There are also views that in the long run, it is still possible to choose the opportunity to start the levy

The current real estate market has undergone major changes in supply and demand

Text/Picture Yangcheng Evening News reporter Xu Weilun

Real estate taxes are in the spotlight again, only this time with the news of a moratorium. In the "Legislative Plan of the Standing Committee of the 9th National People's Congress" released on September 7, the value-added tax law, consumption tax law, and tariff law in the field of finance and taxation were explicitly submitted for deliberation during the term of office of the current NPC Standing Committee, but the real estate tax law, which has attracted much attention, has not been mentioned. Five years ago, in the Legislative Plan of the Standing Committee of the 2018th National People's Congress released in September 9, the real estate tax law was included in the first category of projects, which is a draft law that is relatively mature and will be submitted for deliberation during the term of office.

The absence of a mention of real estate tax in the legislative plan is widely regarded as a sign that the legislative work on this tax has been suspended. Some experts pointed out that under the background of the current unstable real estate market expectations and falling housing prices, it is not conducive to promoting real estate tax legislation; However, there are also views that the purpose of real estate tax is not to directly regulate the real estate market, and it may still be introduced from a long-term perspective.

Real estate taxes were once considered "imminent"

China's real estate tax collection has been promoted for a long time, but it was not until Shanghai and Chongqing became pilot cities in 2011 that it officially entered the stage of collecting real estate tax on individual residences. In 2013, the Third Plenary Session of the <>th Central Committee of the Communist Party of China proposed to "accelerate real estate tax legislation and promote reform in a timely manner", and the central government mentioned real estate tax legislation for the first time. So far, many documents and important meetings of relevant departments have repeatedly studied and continuously adjusted the real estate tax reform plan, but the progress has been slow, and the legislative work has not been officially started.

In April this year, China fully realized the unified registration of real estate, which was once regarded as "completing the preconditions for the collection of real estate tax", and the topic of "real estate tax collection is imminent" has once again increased in popularity. However, the Legislative Plan of the Standing Committee of the 4th National People's Congress does not mention the real estate tax law, or send a signal to suspend the collection of real estate tax.

"Tax legislation is a deliberate and slow process that needs to be steadily advanced. The real estate tax itself is a very important tax, and its legislation needs to be considered comprehensively, especially when releasing relevant policy signals to the outside world. Secondly, this is also closely related to the overall arrangement of China's real estate tax reform 'first pilot and then legislation'. Zhao Heyun, a professor at the School of Finance and Taxation of Guangdong University of Finance and Economics, said that the statement of the Ministry of Finance on March 2022, 3 that "there are no conditions for expanding the pilot cities of real estate tax reform" has already shown that the current legislative conditions for real estate tax have not been met, and it also involves many theoretical and practical issues that have not yet been clarified. Zhao Heyun believes that there is still a long way to go in the reform of real estate tax, and it is expected that most regions will not introduce real estate tax in the short term.

The pressure of the property market affects the timing of the real estate tax collection

The imposition of a real estate tax on individual homes will have a profound impact on the shift in expectations in the real estate market. In 2021, the Standing Committee of the National People's Congress authorized the State Council to carry out pilot real estate tax reform in some areas, when the property market was cold, buyers' confidence in the trend of house prices weakened, and even some owners began to consider selling their excess properties.

"Whether it is the second round of real estate tax pilot proposed by the Ministry of Finance in October 2021, or the inclusion of real estate tax in a type of legislative plan (legislation first, step-by-step implementation), the expected impact on the real estate market is obvious, highlighted by the significant increase in the number of second-hand housing listings in the second half of 10 and the first half of 2021 and the adjustment of listing prices, which will hit the already downward market." Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Urban Planning Institute, said.

At present, the downward pressure on real estate sales is still obvious. According to data from the National Bureau of Statistics, the national commercial housing sales area in 2022 will be 13.58 billion square meters, down 24.3% year-on-year; The sales volume of commercial housing was 13.33 trillion yuan, down 26.7% year-on-year. This data is equivalent to going back to 2017, when the sales area of commercial housing was 16.9 billion square meters, and the sales volume of commercial housing was 13.37 trillion yuan, exceeding 13 trillion yuan for the first time. In the first half of this year, the national commercial housing sales area was 59515.5 million square meters, down 3.2% year-on-year, of which residential sales area fell 8.<>%.

"Despite the recent introduction of a package of relief policies centered on 'recognizing houses but not loans', the recovery of market trading volume is not obvious, and the wait-and-see mood of 'only looking but not buying' is still strong." Li Yujia said that at present, the biggest problem in the real estate market is unstable expectations, stable expectations are the key and premise of stable housing prices and stable transactions, and the signal of "real estate tax legislation postponed" is conducive to stabilizing market expectations.

Zhao Heyun believes: "From the perspective of the macroeconomic situation in recent years, seeking progress while maintaining stability has always been the main tone of macro-control, and any disturbance in the legislative arrangement of real estate tax may obviously affect market expectations." Therefore, the time is not ripe for China to introduce real estate tax. ”

Real estate tax is not directly used as a means to regulate the property market

For a long time, real estate tax has been regarded as a means to regulate the property market, and is even considered by the industry to be a major negative for the real estate industry. Zhao Heyun said that at this stage, real estate has become the main means of wealth and asset allocation for many families in China, so the introduction of this tax may change people's expectations for the real estate market, and then affect macroeconomic stability. "In the long run, the main purpose of real estate tax is not to regulate the real estate market, especially housing prices, but as an institutional arrangement to promote the modernization of national governance, the construction of local tax system, and the healthy development of the real estate market, so it is expected that legislation and related collection will be restarted in the future."

Zhao Heyun introduced that in the process of real estate tax collection, the system of "pilot first and then legislate" is particularly important, the pilot city of Shanghai mainly implements incremental collection, while Chongqing focuses on the collection of high-end stock, in order to stabilize the overheated momentum of the real estate market through taxation, so as to curb residents' speculation and non-basic housing demand. "From the pilot effect, the impact of real estate tax levied by the two places on housing prices is negligible, while the revenue from real estate tax is very small, and the contribution to local fiscal revenue is small."

"The real estate tax legislation and pilot originally intend to establish an urban public service supply model through taxation, that is, the right to enjoy urban public services is obtained by paying taxes. In cities with high payment rates and high payment levels, public services and real estate can also maintain value. Li Yujia said that due to people's biased understanding of the tax, the real estate tax is misinterpreted to regulate the real estate market and adjust the gap between the rich and the poor, which brings the expectation that holding real estate will incur huge costs.

Yan Yuejin, research director of the E-House Research Institute, said: "From the perspective of this legislative plan, the introduction of real estate tax in at least three to five years does not have a market basis. Even if the levy is introduced, the impact on buyers with reasonable housing needs will not be great. After all, the current real estate market supply and demand has undergone major changes, activating reasonable housing consumption demand, optimizing and adjusting real estate policies are the key tasks, and the signal released by this plan is generally in line with expectations. (Yangcheng Evening News)