Real Estate Tax in Urban China

Since its foundation in 1949, the People's Republic of China (PRC) has adopted several contrasting policies to address the urban housing problem. Among them have been changes in real estate tax law. The first real estate tax laws in the PRC were promulgated in January 1950. Amended several times, they became ineffective after 1973. In September 1986, the State Council promulgated a new real estate tax law affecting all urban properties. According to this new law, real estate taxes are to be levied on owners, so that most real estate taxes have been paid by enterprises rather than households. However, with the recent drive to privatize housing in urban China, property rights are being transferred from public to private ownership, and in conjunction with real estate taxes, this is producing undesired inequalities. This paper investigates the development of real estate taxation, examines the role of property tax in the ongoing housing reform, and recommends changes in real estate taxes that would better achieve the government's egalitarian goals. ( JEL H20, R31)