Real Estate Tax Regime And Property Tax Reform-The Lessons From Taiwan Experience

The purpose of the thesis is to compare the structure of Real Estate Tax between Mainland China and Taiwan. Through the study and introduction of real estate related taxes in Taiwan, we can find out the pros and cons for current tax structure, and try to provide the recommendations to the change of Property Tax based on the actual real estate tax market situation in China. Its aim is to establish a sound Property Tax framework and fair tax payment mechanism. The major research methods are comparative study method and documentary research method.The term"Property", from the definition of the wording, is sourced from Hong Kong and South East Asia. Although it is slightly different from"Real Estate", it is basically equal to real property and realty. The thesis will refer to property in its simple and commonly used meaning. Property Tax is the levy to be paid to the government in connection with real property and realty. The tax has been charged for years in China but still has its necessity and rationality. The main purposes are providing the tax revenue for impoverished local government, maintaining the value for public assets, controlling the macro economy, and improving the tax structure.There is no such term of"Property Tax"in Taiwan, but it is reflected in the forms of"House Tax","Land Value Tax", and"Land Value Increment Tax". Housing Tax and Land Value Tax is levied through the whole possession period, but Land Value Increment Tax is levied while the transfer of the ownership or profit obtained from the transfer of the property. There are also some tax items such as"Deed Tax"and"Agricultural Land Tax". There are some features for Taiwan real state tax, e.g. separated tax levy for holding the property and transferring the ownership of the property; separated tax levy for house and land; tax-free and incentive policies as the tools for the government to manage the market; the design of the tax structure is favor to possession rather than the ownership transfer; and real estate tax is one of the major tax revenue for the local government. There are some features can be good examples for Mainland China.There is no"Property Tax"in China as well, but it does have House Tax, Urban Land Use Tax, Farmland Use Tax, Land Value Increment Tax, and Deed Tax, etc. Among all of them, House Tax, Urban Land Use Tax and Farmland Use Tax will be levied through the possession period, and Land Value Increment Tax and Deed Tax will be levied while the transfer of the ownership. Some problems exist in the design of real estate tax in Mainland China, for example, there is no independent and sound real estate tax structure within the framework; it is unreasonable within the regime from the legislation point of view; there is no ancillary fundamental supporting mechanism as a whole.The scope of Property Tax is a good question worth discussion, so we would like to first define the concept of the"Property Tax"and then describe the difference between Property Tax and Land Transfer Price. Both are different in nature, legal relationship, value of the regime, and control method. The concept of renting the land is different from paying the property tax– they are not interchangeable. In addition, Property Tax levy and increase of the financial burden of citizens are two different issues. Moreover, Land Value Increment Tax should not be abolished, because it is a control to the capital appreciation. However, it should be levied together with the appreciation of the house and called"Real Estate Increment Tax". Finally, it is suggested to combine the values of the land and house in levying the tax during the possession period of the property, to include the farmland into the taxation, to separate the levy of Land Value Increment Tax while the ownership is transferred, and to construct a sound evaluation system.In sum, the design of the concrete framework is to consolidate the taxes for real estates during the possession period, and to name such consolidated taxes as"Property Tax". In addition, it is suggested to amend and perfect the content of the Land Value Increment Tax, and change its name to"Real Estate Increment Tax". The obligor of Property Tax is the owner of the property or the easement holder of the property. When the owner or the easement holder cannot be ascertained, the obligor should be the property manager or the current resident. The scope of the subjects of the tax should include the land and all kinds of buildings attached thereto. The values of the house and the land should be combined in calculation for the amount of the tax. The tax should be applicable to both cities and countries. Such tax calculation should be based on the valuation of the property. The rate of the tax should be floating within a certain range, with the authority on determination of the exact rate delegated to the People's Congress and its standing committee at a provincial level. While design the rate for Property Tax, it should raise the rate of the tax to achieve the optimization of resource allocation and levy a higher penalty rate for the idle land to facilitate the best use of the land. Besides, it should exempt the taxation for the following categories including farm lands or houses, public-use real property, and government-use real property, and provide the tax deduction for self-use residential property and industrial-use property as well.