Can reduction of tax levied on property transactions stimulate China?

The economic recession worldwide has cast its nefarious shadow on almost all countries and China that boasts of blending the socialist and capitalist principles in the economic and political scenario is no exception. The country has witnessed a tremendous slump these days and the government is realizing that something must be done to save the socio-economic structure from further debacles. For that reason the Chinese government is counting on the reduction of the business and income tax levied on property transactions. The government hopes that this lone step will revitalize the realty sector and that would put a check on the fear of job cuts.

This single standpoint invigorated the policy makers to convene three-day Central Economic Work Conference. The conference ended with recommending the construction of more low-cost houses along with the stark reduction of tax burden that prevents a prospective homebuyer from moving forward. It its true that for the last few years discontent was mounting among the homebuyers over the escalation of the rate of tax and the economic recession has added fuel to the fire.

According to the opinion of Yang Shaofeng, Managing Director of Conworld, a Beijing-based property broker, the threes forms of taxes that include property deed tax, business tax and income tax have appeared as the greatest impediment before the commoners (especially the new home buyers and those who are opting for second-hand houses). Yang said categorically, “The Ministry of Finance, State Administration of Taxation and the Ministry of Housing and Urban-Rural Development may reduce the taxes soon, in line with the central government decision at the conference.”

Well, the recently concluded conference has also given birth to lots of speculations though the concerned authorities have denied to confirm these. One of them is that the taxes on the purchase of a second-hand apartment could be around 7 percent or even near 10 percent provided that the apartment is larger than 140 square meters. The experts opine that the recommendations should be enacted at the earliest. However many, especially those who have faced the brunt, remain sceptical.