The Chinese government should impose a property tax to cool down the residential market which remains over-priced, said a state research company.
Local governments would be reluctant to deal with possible property bubbles without a property tax due to their dependence on revenue from land sales, said a team of researchers from the State Information Centre, a think tank under the economic planning commission of China.
“Local governments have no intention of curbing high property prices, and it is an important reason for the failure of macro-economic control measures,” said the report. “The key to changing the situation is a property tax.”
Earlier, the State Council of China said that it would advocate a reform on property tax this year.
Reports have also suggested that, the government could begin imposing an annual tax on residential properties on a trial basis, aiming to curb speculation.
Tax issues have helped push down the SSEC, the benchmark stock index of Shanghai.