(ECNS) -- Experts have proposed adoption of a property tax in first and some second tier-cities due to the property market overheating, 21st Century Business Herald reports.
A report by the National Academy of Economic Strategy (NAES) under the Chinese Academy of Social Sciences (CASS) said China's property market is diverging sharply, with skyrocketing prices in top cities and slow increases or decreases in third and fourth-tier equivalents.
Experts at a workshop organized by the NAES said current measures such as controls on land supplies and population reduction in first-tier cities cannot sustain development.
The report added that people will not migrate to third and fourth-tier cities filled with unsold houses just because of rigid controls in mega-cities.
Measures should be also taken to improve infrastructure and public services in smaller cities, it was stated.
Cao Jianhai, a researcher with the Institute of Industrial Economics at CASS, said a property tax should be introduced as soon as possible in top-tier cities because high housing prices have raised business costs and driven away enterprises.
Guo Kesha, also a CASS researcher, said the property tax can be piloted in some regions to gauge its impact.
The report also called for state-owned enterprises to withdraw from the profit-oriented real estate market because they are fueling rising land costs.
China introduced property taxes in Shanghai and Chongqing on a trial basis in 2011 to tighten control over property markets. These programs were expected to be implemented in other regions as well, but expansion was postponed due to questions over the legal basis of property taxes. The Third Plenary Session of the 18th Central Committee of the CPC has decided to accelerate lawmaking to govern property taxes.
