The real estate tax pilot project has finally come! On October 23, 2021, the standing Committee of the National people's Congress decided to authorize the State Council to carry out pilot real estate tax reform in some areas (hereinafter referred to as the "decision").

1 the reasons for the pilot real estate tax

(2) the pilot scheme of real estate tax

(3) the influence of real estate tax pilot project

4 Prospect

5 Stone from other mountains: how to levy real estate tax in the United States, Britain and Japan

The reform of real estate tax has been accelerated, and real estate tax has been mentioned many times in important meetings and documents in recent years. Compared with previous statements, this "decision" further defines the reform objectives, implementation paths and collection objects of the real estate tax pilot project.

1 the reasons for the pilot real estate tax

first,Regulate and control real estate, strictly implement "housing without speculation", and increase the cost of ownership.Since the 2016 Central Economic work Conference first proposed "housing speculation", the annual government work report has been used to set the tone of the real estate market that year. "decision" put forwardIn order to actively and steadily promote the legislation and reform of real estate tax, guide the rational consumption of housing and the economical and intensive use of land resources, and promote the stable and healthy development of the real estate market.Therefore, the pilot areas should mainly focus on hot cities under rising pressure on house prices, such as the Yangtze River Delta, Pearl River Delta, Beijing-Tianjin-Hebei and some regional central cities; at the same time, after deducting the deduction area, taxes may be imposed on multiple apartments and luxury homes that speculate in real estate.Second, with the gradual end of the era of large-scale real estate development, land finance is difficult to sustain, the era of stock housing is coming, the transformation from land finance to real estate tax is the trend of the times and forced by the situation.According to the data of the seventh censusThe urbanization rate of China's resident population in 2020 is 63.9%.Considering the families of 286 million migrant workers left behind in rural areas (including 169.59 million migrant workers and 116.01 million local migrant workers), if we can realize the citizenization of migrant workers and the equalization of basic public servicesThe wide-caliber urbanization rate in China has reached about 75%.The urbanization rate in developed countries is generally between 80% and 90%, the stage of rapid urbanization is coming to an end, and land finance is difficult to sustain. According to our estimates, the cost of land plus tax accounts for about 60% of the house price. According to the Ministry of Finance,2The total income of local government and real estate in 20 years: 10.4 trillion, of which the income of state-owned land transfer fee is 8.4 trillion, and the total tax revenue of five special taxes on real estate is 1.97 trillion.. From 2012 to 2020, the proportion of land transfer fees in local revenue increased from 20.0% to 30.4%. From 2012 to 2020, the combined share of land transfer income and special real estate tax in local revenue increased from 27.1% to 37.6%.
Third, local finance is tight, real estate tax pilot, improve local main body tax, increase local stable sources of tax revenue.In the United States, local subject taxes are real estate tax, consumption tax and personal income tax. At present, there is a great pressure on local income in our country, which is the main reason.Stricter supervision of hidden debts of local governments and the recession of the real estate market. Since May 2021, real estate sales have cooled rapidly. In September, the sales area and sales of commercial housing were-13.2% and-15.8% respectively compared with the same period last year. As of October 17, there were 822 listed plots with centralized land supply and 266 failed auctions, with a failed auction rate as high as 32.4%, with Beijing, Guangzhou, Hangzhou and Shenyang having a failed auction rate of more than 50%.

Fourth, real estate is the main wealth asset of residents, and the real estate tax reform legislation will help to give full play to its function of regulating personal income distribution, narrowing the gap between the rich and the poor and realizing "common prosperity".The resident department mainly pays income tax (salary income, labor income, author remuneration income, property lease income, etc.), and the property tax is basically zero. However, after the rapid economic growth, the society has accumulated a large amount of stock wealth, and it is impossible to adjust the income gap only by taxing wages. Levying property tax (mainly property tax and heritage gift tax) can not only regulate high income, but also provide financial support for the social security of low-income groups. China's income gap is at a high level, with a Gini coefficient of 0.465 in 2019, higher than the warning line of 0.4. The wealth gap is at a medium-low level in the world, but it is rising rapidly, and the proportion of China's top 1% residents in total wealth rose to 30.6% in 2020.

(2) the pilot scheme of real estate tax

1) from the perspective of tax sources, the pilot areas will mainly focus on hot cities with rising house prices, such as the Yangtze River Delta, Pearl River Delta, Beijing-Tianjin-Hebei and some regional central cities.To adopt the pilot method of hot cities, in addition to the reduction of technical difficulty, there is also a reduction in complexity.If the real estate tax is levied across the country, it is necessary to realize the national real estate real name system and real estate networking.According to the experience of the United States, South Korea and Britain, the real name system of real estate and the real name system of finance are the basis of modern national governance, which is not only economic reform but also political reform.

2) from the point of view of the tax object, it is more likely to be taxed on the basis of stock housing.One of the reasons why the pilot projects in Shanghai and Chongqing failed to achieve the expected results was that the tax range was too small, with Shanghai taxing only newly purchased homes and Chongqing taxing only high-end homes. As the first-and second-tier cities enter the era of stock housing, the growth rate of incremental housing slows down, and the tax object will be based on stock housing.

3) from the perspective of taxation basis, it is expected that the pilot real estate tax in China will be based on market evaluation value.Based on the experience of developed countries and Shanghai-Chongqing scheme, there are two ways to levy taxes on the basis of virtual rent or market evaluation value. It is expected that the pilot real estate tax in China will be based on market evaluation value.And give deduction area or tax preference according to the number of family members, dependency burden, fertility status, special groups and so on.

4) from the point of view of the tax rate, the scope of the tax rate may be defined by the State Council, the differential tax rate may be determined by local policies, and the overall tax rate will not be too high.According to the experience of developed countries and Shanghai and Chongqing, the real estate tax rate mainly adopts progressive tax rate, average tax rate, and the tax rate is low. Previously, Shanghai and Chongqing adopted tax rates of 0.4%, 0.6% and 0.5%, 1%, and 1.2% respectively. It is expected that pilot cities will implement policies based on the city, and the tax rate will not be too high at the beginning.

5) from the perspective of tax preference, the first set of exemption and exemption area may be adopted, and the rigid demand and special groups may be exempted at the same time.Previously, the exemption area of the Shanghai pilot program is twice the per capita living space, and this pilot is expected to make adjustments to the exemption area to expand the tax base.

6) at present, the main controversial points are:Due to the heavy deed tax and land value-added tax in the transaction link, whether levying the real estate tax in the stock link can reduce the tax burden in the transaction link, otherwise the overall tax burden of the residents will be greatly increased; how to solve and explain the relationship and rationality between 70 years of civil residential land use rights and real estate tax, what to do after 70 years, and whether to give residents stable expectations? The choice of launch time, the early three red lines, loan concentration management, purchase restrictions and other policies focused on the introduction of policies, the current real estate market and soil market is depressed.

(3) the influence of real estate tax pilot project

As the real estate tax is mainly levied on a pilot basis, the tax may not be too big at the beginning, step by step. The effective rate of real estate tax in US states in 2018 is 0.27% Mel 2.4%. However, it is also necessary to prevent the repetition of sports "carbon reduction" and so on.

In the short term, the current real estate market sales are light and the land market is largely unsuccessful, so the introduction of real estate tax at this time has a lot of pressure on the market, and the specific impact depends on the intensity of taxation. The ideal time for the launch of the policy should be when the real estate cycle is upward and the market sales are hot, such as 2015-2016, when the market and enterprises can catch up. Of course, there is a time span from research, formulation to landing. We have previously proposed that "real estate is the hardest bubble, strive for a soft landing, avoid a hard landing, and trade time for space."

In the long run, the impact of real estate tax on specific regions still depends on supply and demand.According to international experience, when supply falls short of demand and money overissues, the tax burden can be transferred, otherwise it cannot be transferred or even increase the pressure on the regional market.Real estate looks at population in the long term, land in the medium term and finance in the short term.According to our research, in the future, China's population will converge to metropolitan urban agglomerations and regional central cities, and there will be an obvious differentiation in the real estate market between population inflow and outflow areas. this has happened in the United States and Japan (refer to "Chinese population Migration" and "ranking of Chinese Urban Talent attractiveness: 2021"). According to our "China Housing inventory report: 2021", the housing-to-household ratio in cities and towns in China is 1.09 in 2020, and that in first-tier, second-tier and third-and fourth-tier cities are 0.97,1.08,1.12 respectively. The overall housing in China has been in static balance, but there is a great difference between regional supply and demand. With the influx of population to urban agglomerations in metropolitan areas, we will still face the phenomenon of housing shortage in the future. However, in the low-energy cities of northeast, northwest and non-metropolitan urban agglomeration, due to the serious population migration, there is not only oversupply, but also the degree of surplus will deepen in the future.In the long run, the fundamental solutions to the housing system reform are urban agglomeration strategy, human-land linkage, financial stability and real estate tax.In order to achieve the balance of supply and demand, so as to change the current problems of human-land mismatch, the separation of supply and demand, high housing prices in the first and second lines, and high inventory in the third and fourth lines.

4 Prospect

Authorized by the National people's Congress, it is expected that the future real estate tax will be piloted in hot cities with rising house prices, which is stronger than the existing pilot projects in Shanghai and Chongqing. After the pilot project, it will be gradually expanded.The decision states, "the pilot period authorized by this decision is five years. Enact laws in time when the conditions are ripe. "

With the advent of the era of stock housing, the transformation from land finance to real estate tax began to start.According to the "China Housing Market value report: 2021"In 2020, the market value of China's housing is 418 trillion yuan, which is 4.1 times that of GDP and accounts for 66% of the market value of debt houses.. In terms of the ratio of housing market value to GDP, China will be 414% in 2020, which is higher than 148%, 233%, 271%, 339% and 354% in the United States, Japan, Germany, Britain and France. From 2000 to 2020, the market value of China's housing increased from 23 trillion yuan to 418 trillion yuan, with an average annual growth rate of 15.6 percent; the per capita housing market value increased from 18000 yuan to 296000 yuan, with an average annual growth rate of 15 percent, higher than 12.3 percent of per capita GDP; and the per capita housing market value of cities and towns increased from 45000 yuan to 434000 yuan, with an average annual growth rate of 12 percent.
What is the general trend? It is to reduce the profits and monopolies of real estate, finance, education and the Internet, as well as the resulting long-term squeeze and costs on people's livelihood and the real economy, vigorously develop manufacturing, hard science and technology, real economy, new energy, new infrastructure, capital markets, and so on. A great change that has not occurred in a century is also a great opportunity not seen in a century. It is very important to see this trend clearly. Every enterprise and everyone is ultimately a product of the times.

China will face three major challenges in the medium and long term: the risk of trade friction and decoupling between China and the United States, the accelerated aging of the population, and how the hardest real estate bubble can avoid a hard landing and achieve a soft landing. In the face of these three major challenges, we have implemented a series of strategies and policy adjustments, such as achieving self-reliance in science and technology, solving the "bottleneck" technology, the registration system and the Beijing Stock Exchange to serve "specialization and innovation", vigorously promoting the revolution of new energy and new energy vehicles, liberalizing the three children, cleaning up out-of-school training, delaying the retirement age, anti-monopoly and preventing disorderly capital expansion, pilot property taxes, three red lines, loan concentration management, and so on. If you choose to do the right thing, luck is on your side.

5 Stone from other mountains: how to levy real estate tax in the United States, Britain and Japan

Property tax in various countriesThere are various forms and different policies. From the perspective of tax basis, there are mainly two kinds: one is based on virtual rent, and the other is based on assessed value. From the perspective of tax rate, the developed countries mainly adopt progressive tax rate and average tax rate. From the perspective of tax preference, developed countries mainly use tax deduction, delay in paying taxes, tax reduction, setting threshold and so on.

The main results are as follows: 1) the land and housing in the United States are taxed integrally. the real estate tax is based on the evaluation value, which is close to the market value, and the tax rate is determined by the local government.The United States implements an integrated taxation model for land and housing, which is usually collected by the county government and then transferred to the corresponding departments. Real estate tax = evaluation value x evaluation rate x nominal tax rate. From the perspective of tax basis, the United States takes the evaluation value as the tax basis, and the evaluation value is relatively close to the market value; some states do not levy the full evaluation value, but set the evaluation rate to adjust the effective tax rate of different types of real estate. From the perspective of tax rate, the United States determines the tax rate through "fixed income", and the local government determines the tax rate according to the budget expenditure and income, the evaluation value of real estate and the evaluation rate. From the perspective of tax preferences, the United States gives tax concessions to rigid demand, the elderly, the disabled and low-income groups by way of tax deduction and delayed tax payment.

2) the British property tax originated from the "stove tax" in England in the middle of the 17th century, that is, the tax on the number of stoves owned by a household, which is used to provide relief to the poor.The municipal tax is levied on the housing ownership link, and the tax base is assessed by the evaluation agency, which is divided into eight or nine levels. In 1662, Britain levied the stove tax according to the number of stoves in the home. In 1989, the community fee levied per person according to the annual quota was adjusted many times. The tax base experienced many changes, such as the number of stoves, the number of windows, the rental value and so on. In England, Scotland and Northern Ireland, the value of each house in April 1991 is divided into eight Amurh grades, while Wales is divided into nine A-I grades according to the value of houses in 2003, and subsequent houses are classified according to the prices of these two base periods. In 2018, Amuri I houses in England and Wales accounted for 24%, 20%, 22%, 15%, 10%, 5%, 4%, 1% and 0%, respectively. The tax rate is based on D-class housing, and the tax is progressive. In Britain, the tax amount of class D housing is determined by "expenditure and fixed income", and the municipal tax is regarded as a local tax, and the regional governments determine the tax amount of class D housing in this area according to the expenditure gap of the fiscal budget of that year. By controlling government expenditure to limit the amount of housing tax payable, it effectively balances the tax burden relationship between financial demand and taxpayers. Nowadays, British housing property tax is an important source of revenue for local governments, which is mainly used for public utilities expenditure of British local governments. According to the British Bureau of Statistics, in fiscal year 2020, English municipal taxes collected a total of 32.2 billion pounds, accounting for 29% of the total revenue of local governments.

3) Japan levies fixed assets tax and urban planning tax on the holding link, takes the evaluation value as the tax base, the evaluation value is less than the market value, and sets up the "burden rate" adjustment mechanism.The Machimura government of the city of Japan levies fixed assets tax and urban planning tax on land and property owners every year. From the perspective of tax basis, fixed assets tax and urban planning tax have the same tax base, both are the evaluation value of housing or land, which is evaluated every three years, and the evaluation value of land is generally 70% of the public price of land in the previous year. Set up a "burden rate" adjustment mechanism to avoid additional tax pressure caused by large fluctuations in land prices. From the point of view of the tax rate, the benchmark tax rate is set by the central government and adjusted by the local government. The base rate of fixed assets tax will remain at 1.4% for a long time, and the urban planning tax rate will be 0.2% and 0.3% respectively. From the perspective of tax preference, Japan sets a starting point as a way of tax preference, exempting land with an estimated value of less than 300000 yen and houses with a value of 200000 yen.