Improvement Of China Estate Taxation Legislation Under The Ability-to-pay Principle.

Since the reform and opening-up, China is having a rapid development of estate market.However, the government did not establish a corresponding thorough Real Estate Legislation.In case of this, a series of severe issues were caused eg. speculation in housing market; the appearance of property bubble; unreasonable housing supply structure; the rising difficulty of house-purchase for normal residents; etc...Hence, some major issues like the increasing inequality imbalance and gap in the distribution have gradually become heated.The State Council stopped the Property Tax Reform Experimentation in 2014, turned toprogressively accelerate the property tax legislation and gradually reform the real estate market mechanism. Based on this, the country showed her determination of reforming the top levelof Real Estate Tax in a legislation perspective way. As a major sector of Real Estate system, the Real Estate Tax gave the scope to regulating the allocation of resources and promoting positive distribution. Furthermore, the reformation need be promoted under the protection of lawsand restrained in a reasonable range. Based on these conditions, the country rights offsidingwill be avoided, whilst, the legal system will be leaded to a scope of protecting the taxpayers.However, the Ability-To-Pay Principle is a reflection of the substantial justice restraining legislation. The Ability-To-Pay Principle suggests: ’the tax convention need to consider taxpayers’ basic living conditions, exempted lowest households from paying tax. In case of this, each taxpayer bears the tax burden consistent to their financial situation and the principle balances each taxpayers loading standard.’ Hence, the principle provides a realistic reference point as a fairness doctrine for Estate Tax Legislation.Previously, our Estate Tax collection is base on < Provisional Regulations of the People’s Republic of China on Real Estate Tax > which was published by the State Council in 1986.According to the regulation, the tax levy scope and tax calculation was determined based on the financial situation back in 1986. Hence, the regulation partly restricts its due functions andagainst legal justice.This paper references Ability-To-Pay Principle, illustrates the connotative meaning, thecompatibility of tax legislation and the guiding significance for perfecting the estate tax legislation in the first place. Furthermore, this paper analysis the absence of current Ability-To-PayPrinciple, which includes the problems existing on objects of taxation, tax basis and tax ratedesigning. Moreover, it illustrates the failure experience of estate tax experimentation at Shanghai and Chongqin. Then, this paper concludes the beneficial results on building estate tax system from developed countries. In the end, basing on the requisition of Ability-To-Pay Principle, this paper points out a proposal of perfecting China’s estate tax legislation. It includes theperactice of broader tax collection basis and lower tax rates, reasonably certain the scope of cutting tax. Moreover, it considers urban non-operating personal property, rural running real estate and properties belong to enterprises as object of taxation that offers relative tax rate and preferential policy to different types and applications of properties. In the meantime, this paperalso delivers suggestions on completing current registration system and building property evaluation scheme. Hence, by reforming Estate Tax, the substantive justice will be revealed and the society will be promoted into harmony and communal prosperity.