File photo taken on Nov. 14, 2010 shows a newly built residential community in east China's Shanghai Municipality. [Photo: Xinhua/Chen Fei]
Media reports in recent months suggest that China's government may impose a property tax on a trial basis in several cities, including Chongqing, Shanghai, Beijing and Shenzhen.
Unlike other cities that plan to tax only high-end property purchases, Shanghai could impose its property tax on all second-home purchases or newly purchased properties whose floor space exceeded preset standards.
A commentary in the "Nanfang Daily" hails the tax as an effective way to adjust land and property markets, but cautions that the effect of such a tax would be useless or even pernicious for a harmonious relationship between the government and ordinary people if the local government continued to depend on revenue from land sales.
The commentary notes that with revenue from land sales continuing to be a major contributor to government budgets in China, it would be unreasonable for the government to earn revenue from selling land while it levied a tax on the properties it sold. The commentary argues that this double-taxation system could only trigger social discontent and instability.
The commentary further argues that abolishing the financial dependence on land sales would be the first and foremost premise for local governments to levy a property tax whose revenue in turn should also be used to improve taxpayers' livelihoods.