Levying Real Estate Tax In China: The Dilemma And The Copinglegal Measures

Real estate tax refers to the type of property tax that adopts real estate as the subject, takes the taxable residual value or rent of the subject real estate as the taxation basis and is levied on the real estate owner, managing entity, pawnee, property custodian or user, as the case may be. With the rapid economic and social developments in China, the deepening of the comprehensive reform of the housing system, and the quickening process of urbanization in the country, the Interim Regulations on Real Estate Tax promulgated in 1986 has become insufficient in face of the latest developments in the country, with many problems pestering the taxation system and tax collection administration system. In view of this, the communiqué adopted at the 3rd Plenary Session of the 18 th Communist Party of China Central Committee calls for “deepening the reform of the taxation system, optimizing the local taxation system, and gradually increasing the proportion of direct taxes.” As an important part of the development of China’s local taxation system, the reform of the real estate tax is inevitable. How to implement the real estate tax reform so that the important role of the real estate tax will be given full play has become an important issue to be solved by the current government of China. Proceeding from the fundamentals of the issue, this paper first elaborates on basic aspects of the collection and regulation of real estate tax, and introduces the fundamental rules and current state of affairs in connection with the level and regulation of the tax in China. This thesis argues that viewed in light of the actual taxation practices of China, the levy and administration of real estate tax are burdened with a number of problems, for example, the approach to levy and regulation is obsolete, the levy and regulation system is outdated, the levy and regulation processes are not scientific, the day-to-day levy and regulation is pestered by many prominent problems, and the supporting institutions are insufficient, etc. At present, the pilot reform program of the real estate tax in Shanghai and Chongqing is providing experiences for the implementation of the reform nationwide. However, it must be pointed out that the reform so far only has had limited effect in such areas as generating fiscal revenue for local governments, adjusting the allocation of income among the population and guiding spending on real estate. Therefore, in order to advance its real estate tax reform, China should learn from the successful experiences of other countries. For example, many developed countries, represented by members of the Organization for Economic Cooperation and Development, have fairly mature models for the real estate tax collection and regulation, which can be very helpful to China’s real estate tax reform. In light of the current state of China’s tax collection and administration, this thesis makes a series of proposals: a brand-new approach to real estate tax collection and regulation must be adopted, the scope of the payers of the tax should be adjusted, the individuals and entities with the obligation to pay the new tax should be redefined, the collection and regulation method should be reformed; furthermore, the valuation of real estate should be adopted as the taxation basis, a uniform tax rate should be followed, collection notices should be adopted to prompt taxpayers to fulfill their obligations, an assessment system should be established for real estate and the existing systems and rules in connection with assisting the collection of taxes and the protection of eligible tax revenue should be improved.