China should raise taxes on home ownership to target speculators who had recently driven property prices to record highs, the State Information Centre, a government think tank, said in comments published on Monday.
Since Chinese home prices have not fallen to “reasonable levels”, Beijing should not relent on restricting property purchases, the think tank was quoted by the China Securities Journal newspaper as saying.
The government has not stated what it considers to be reasonable price levels.
The centre’s remarks come after a group of senior government advisers last week urged Beijing to shore up slowing economic growth by ending restrictions on the property market, and follow May data that suggested China’s home prices may be near a bottom.
Home prices more than doubled in 2009 after Beijing rolled out a massive economic stimulus package to combat the global financial crisis.
It followed with a string of measures to crack down on property speculators and take the heat out of the market, but average prices across the country have only fallen by an estimated single-digit percent since the peak.
The think tank said China should unify its present array of property related taxes by cutting transaction taxes, while raising taxes on those with multiple homes to penalise speculators without hurting genuine home buyers.
Effective property taxes could replace purchase restrictions, which bar citizens from buying more than two homes,as China’s main tool for controlling home prices, it said, without saying how high taxes should be.
“We should seize the opportunity when home prices are falling to build a healthy property tax system,” the State Information Centre said in a report.
China currently has 10 different types of taxes on property transactions, but only two taxes for home ownership, it noted.
To cool home prices, China could also set up a fair system for land auctions, property investment and financing, the think tank said.
The cities of Shanghai and Chongqing became the first Chinese cities to enforce property ownership taxes last year in an effort to cool rising house prices, but covered few properties and at less than 1.2 percent the taxes were seen to be too low to be effective.