Tax on Non-local Home-buyers, A Prejudice?
  2006-06-07 10:36:25      CRIENGLISH.com
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Geng Suling, a member of Beijing's local legislative body, has sparked a debate by suggesting that anyone who's lived in the city for less than two years should be taxed when they buy property.

The point is to curb Beijing's sky-rocketing real estate prices and many city residents can't agree with her more. 

"Why do the real estate prices in Beijing grow steadily? That's because of those wealthy home buyers from outside Beijing. They buy the houses not for living but for making money."

But is it fair to assume that all out-of-towners are real estate speculators?

A salesgirl at a new housing development project tells us 40% of the buyers were from out of town, but most bought their apartments as places to live.

Mr Gao from Shandong Province has just found his first job in Beijing. He's already thinking of buying his own home.

"Governments shouldn't impose a uniform tax on all non-locals. For example, I've just arrived in Beijing, but I want to live in a place of my own."

Industry insider Li Wenjie says the proportion of people who buy real estate to speculate on the market is small compared to the large number of out-of-towners who buy homes because they live and work in the capital city.

He thinks the proposal will be biased and localistic if put in place.

Li Winjie also doubts the suggestion will squeeze the bubble out of the property market.

"If the rise in housing prices is bigger than the rise in loan interest rates or tax, speculative buyers will still think property is a good investment. So in my opinion, imposing tax or raising the bank loan interest rates may not curb speculation."

Other experts also say though the proposal has good intentions, it doesn't offer a good solution.

Professor Liu Heng is from the Central University of Finance and Economics.

"Tax policy should be mutual. Tax rate should be unprejudiced to everybody."

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