A Historical Investigation on the Legislation of China’s Real Estate Tax

Abstract

At the second session of the comprehensive deepening of the reform group in 2014, Comrade Xi Jinping stressed that all major reform should be based on the law. In the whole reform process, we should attach great importance to the use of the rule-of-law thinking and method, and strengthen the coordination of relevant legislative work. The problem of real estate tax is a major reform of this kind. First of all, the legislative history of real estate tax is fully understood from a historical perspective. Many problems in today’s legislation can be traced back to the source from the history. So by returning the legislation of real estate tax to thirty years ago, and careful observation of the changes in the legislation of real estate tax during the thirty years, it helps us to understand all the problems today. In this part, it can be divided into two stages, before and after 2011 when Chongqing and Shanghai started pilot legislation of real estate tax. In the former stage, the real estate tax system refers to the tax system of the urban business housing. Since 2011, the real estate tax law has further extended the scope to the private non-operating housing owned by the individuals. This means that the universal property tax will be gradually pushed aside. Secondly, the positive and negative aspects of the pilot real estate tax in Chongqing and Shanghai are thought in depth. It is a little biased that the academic circle focuses on negative factors of the experimental study of real estate tax, and criticizes the real estate tax mainly from the perspective of formal rule of law. Specifically, the positive significance of the pilot real estate tax in Chongqing and Shanghai has both the significance of ice breaking and the paving of the people’s psychology. And the negative factors of the pilot real estate tax in Chongqing and Shanghai also provide a new way of thinking for our future legislation of real estate tax. For example, the central government should adopt the unified legislation, but it may be appropriate to give the provincial governments the discretion in the aspect of partial tax elements. Moreover, we should have an international perspective, take cultural factors into account and study related foreign systems, including related real estate tax in South Korea, Germany and the United States. The comparative study on real estate tax systems with different cultural circle helps us to consider comprehensively in the forthcoming legislation of real estate tax, and make full use of some mature experience based on the national conditions, like real estate tax relief system, in order to conform to the principle of taxation according to the ability to pay. In a word, through the historical observation of real estate tax for thirty years, and focusing on the actual effect of pilot real estate tax in Shanghai and Chongqing since 2011, we have reviewed the experience and lessons of pilot real estate tax in Shanghai and Chongqing from both sides. From the positive and negative sides, we have investigated the value and function of real estate tax in the three aspects, need to promote the real estate tax reform through the rule of law, and consider the relevant authority of the central and local authorities, so that we can successfully promote the real estate tax reform in a relatively short time. In addition, in the concrete promotion of the legislation of real estate tax, we should fully learn from the experience of the United States, Japan, South Korea and other countries, and set up relevant supporting systems, so as to avoid a roundabout way.