Editor’s note for Tuesday, October 19, 2021

My thoughts today:

Will Beijing finally impose a property tax? There is currently no regular tax on real estate, leading to many undesirable effects on the economy and in cities: People tend to amass wealth in the form of property, which can be left unrented or unused without the owners being taxed.

Perhaps this will change. On October 15, the Party’s journal, Qiushi, published an essay (in Chinese) by Xí Jìnpíng 习近平 based on a speech he gave in August which made “common prosperity” China’s hottest political buzzword of 2021. In that essay, he writes: “We should actively and steadily promote the legislation and reform of real-estate tax, and do a good job in the pilot work.”

Cue a renewed discussion of property tax. The Wall Street Journal’s Lingling Wei has a new piece on the subject:

Mr. Xi appears bent on putting in practice his slogan: “Housing is for living, not for speculation.”

However, in internal debates, the feedback to his property-tax plan from both the party’s elites and its rank-and-file members has been overwhelmingly negative, say the people familiar with the deliberations.

Arguments against the tax, which would be levied annually on the value of a property, have flooded in since the ministries of finance, housing and taxation started to seek feedback to the tax proposal in the spring. Many officials contend that such a levy could crush housing prices, cause consumer spending to plunge and severely harm the overall economy.

Some retired senior party members also petitioned against imposing the new tax, saying they themselves couldn’t afford to pay any additional taxes.

For more on property taxes, see also Reuters, or this Twitter thread from scholar Martin Chorzempa.

Our word of the day is real estate tax (房地产税 fángdìchǎn shuì).

—Jeremy Goldkorn, Editor-in-Chief