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General Office of the CPCCC& SCIO: Exploration and Innovation in House Property Tax Supported

2017-01-13No. of Hits:948Author:www.people.com.cn

Recently, Guiding Opinions on Innovative Government Allocation of Resources has been issued jointly by General Office of the CPCCC & SCIO.

  It's stated in the Opinions that, on the condition that unified national market is maintained, local exploration and innovation in new-style urbanization, state-owned assets and SOE reform, regional financial market and institutions, house property tax, endowment insurance and medical insurance etc. are highly supported by the nation.

  According to experts interviewed by the reporter of National Business Daily, the effect of house property tax is not clear in the control of housing price, and we should not expect it to be the only means of normalizing housing price.

  Experts: Scope of House Property Tax Extensible

  At the end of January 2011, pilot reform of individual residential house tax started to implement in Shanghai and Chongqing.

  According to media report, for over four years since the introduction of house property tax in these two cities, it has negligible impact on local housing price, and the taxable amount is very small, with minor contribution to local financial revenue.

  Liu Xueliang, Research Associate of the Office of Macroeconomic Research, Institute of Economics of CASS introduced to the correspondent of National Business Daily, that scope of pilot reform in house property tax is too narrow in Shanghai and Chongqing. Considering cost factor of government taxation, tax revenue in the pilot regions may fail expected effect.

  Liu believes that, in view of international experience, house property tax falls into local tax, which local government may exercise autonomous right.

  Given the national situation in China, he adds quote "there is a big gap of development condition in different regions, so is the difference of housing price, the way of local pilot reform may bring about better effect than indiscriminate control by central government".

  In the opinion of Zhang Deyong, Research Fellow of National Academy of Economic Strategy, CASS, due to extreme difficulty in the design of house property tax, central government welcomes brainstorm of innovative method in all regions.

  Talking about the original intention of designing house proper tax, he thinks that no clear target is set for collecting house property tax. Is it aimed to enlarge financial revenue or control housing price?

  For measure of expanding financial resources, collectable scope of house property tax will be expanded, but it'll cause many problems, for instance, how is property price evaluated? How do we check the number of houses by each owner? How to treat with failing individual taxpayer? And so on.

  "If we aim to control housing price, it's unclear it'll help to stabilize housing price, at least to date," Zhang says.

  According to Liu Xueliang, house property tax should be collected with wide tax base, low tax rate and extended scope; moreover, considering tax shifting factor, excess selective policies and exemption clauses are not advisable.

  Sharp Decrease of Resources Directly Allocated by Government

  In addition to reference of hot topics like house property tax, deregulation of market access is described in detail in the Opinions.

  Yesterday, an article by Xu Shaoshi, Director of NDRC was published on People's Daily, which said innovation in the method of governmental allocation of resources is an inevitable requirement of the market having decisive function in resources allocation. Given current problems of lack of market rules, distortion of market price and constraint of fair market competition in some fields as a result of direct resources allocation by the government, the part of resources directly allocated government should be cut sharply, together with deregulating market access in related fields, facilitating reasonable flow of elements, efficient allocation of resources, and deep market integration, so as to drive resources allocation to the maximum degree, and realize maximum benefit and optimum efficiency by means of market rules, market price and market competition.

  Bi Zhiqing, Senior Partner of Beijing Dayue Consulting Co., Ltd., introduces to the correspondent of National Business Daily, that in full business operational fields, resources are basically allocated by market rules, however, market mechanism is not fully introduced in the sectors of infrastructure and public service, most of which are subject to administrative management.

  As for distortion of market price, Bi thinks that cost factor of public service and municipal utility was not paid due attention by the government. He argues that what is unclear to date is the pricing of public service on the principle of base cost or merely in consideration of affordable price by the residents. Such uncertainty worries the investors, in the mindset of "in weighing investment, cost and return, when the cost rises, whether the price rises accordingly."

  According to Jin Yongxiang, Managing Director of Beijing Dayue Consulting Co., Ltd., price mechanism will become a point of focus, which is very important to Public-Private-Partnership (PPP) project.

  "Many people are not optimistic about PPP project, in which the investors are reluctant to take part. Actually, PPP project is not faulty by itself, but at low price, leading to low cash flow and lack of investment value. If price is restored to normal level, PPP is profitable."

  From the viewpoint of Jin, innovation is impossible without participation of social capital, and innovative model is nothing without PPP model.PPP model will remain to be a national policy for a foreseeable long period, and play a big role in the supply of public products and public service.

  "PPP will not only deliver quality service, but also create opportunity for advancement of social capital, and ultimately benefit the public", he adds.

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