A Study Of Urban Residential Real Estate Tax In A Perspective Of Regulating Possession Of Wealth

Since China’s founding to early eighties, there existed the mode of welfare housing distribution in cities and towns. Since the monetization of housing reform in 1998, China’s housing system by the welfare distribution shifted to market-oriented housing industry system, which improves living conditions and promotes the vigorous development of real estate. In recent years, real estate price has been soaring, real estate investment and speculation behaviors prevail among the wealthy. The phenomenon of hoarding houses is serious and real estate has become an important indicator to measure household wealth. With the increase of proportion of urbanization, the low-income classes who have rigid demands for houses can only "sigh toward houses." Nowadays the residential real estate owned by individuals is exempted from property taxation. In the absence of property taxation, property and income interact with each other, leading to growing disparity in wealth possession.The Third Plenary Session of the 18 th Central Committee of the Communist Party of China held in 2013 put forward that "speed up the real estate tax legislation and promote the reform timely ", since March 1, 2015, Interim Regulation on Real Estate Registration has been carried out. There are indications that levying tax on real estate in the stage of tenure is the trend of future development. Based on a clear position, under the premise of reform orientation and direction of real estate taxation, establishing a modern system of property tax to narrow the gap between the rich and the poor, is of crucial significance at present.An important property tax the real estate tax is, it is difficult to transfer the tax burden, and its revenue source is not easy to flow, making it quite suitable to be an important means of regulating the income distribution and wealth possession. The intention of property taxes should first address the question of disparity in wealth possession regardless of raising revenue for local government or adjusting housing price. Therefore, this article is reasonable to study the property tax from the perspective of regulating the possession of wealth. As long as the real estate tax is designed scientifically and sophisticatedly, this paper believes it can take on the important task of regulating possession of wealth.First, this article focuses on the imbalance of wealth possession, studying the necessity of levying tax on residential property. It explains the fact that income distribution gap is larger than before based on Gini coefficient. By contrasting urban residents’ per capita disposable income growth and housing wealth, it shows that the uneven property possession is far greater than the income inequality. Then the charts show the rates of possessing more than one suite of houses, housing vacancy rates and disparities in housing costs and market prices in urban areas. Rising real estate prices fuels investment and speculation behaviors in the real estate market, resulting in misallocation of housing resource and exacerbating the gap between the rich and the poor in the background of uneven property possession.Secondly, from the current property tax and the property tax reforms in Shanghai and Chongqing, the paper analyzes the function of regulating wealth possession by using property tax. The initiation of property tax reform in Shanghai and Chongqing in 2011 ended the era of zero tax on residential real estate in China. The more than three year long pilot property tax program, however, exerted a limited influence in regulating wealth possession. Trough comparative analysis of property tax rules in Shanghai and Chongqing explicate that the pilot program in two cities on the design elements of the tax system does not meet the requirements of property tax. It does not conform to the property tax that is recognized internationally, but with more characteristics of commodity taxation. There are obvious flaws in tax subjects, applicable tax rate, tax standards, and tax-free area. Specifically the vast majority of housing stocks are excluded from the scope of taxation, low tax rates, unreasonable tax-free area, and the transaction price regarded as the tax basis.Furthermore, Western countries have a long history in imposing tax on real estate. They establish a perfect tax system of house tenure and have accumulated abundant experience in assessment and administration of real estate tax. This article draws on the United Kingdom, Singapore, and South Korea’s experience in levying real estate tax. Their experience has positive significance for the establishment of residential real estate tax. This paper conducts a detailed analysis and summary.Finally, by describing the theoretical basis, realistic analysis, and experiential description in detail, this paper offers advice on regulating possession of wealth with the method of real estate taxation. The components that should be taken into consider includes the basic principles, prerequisites, directions of tax elements, and related facilities, which will be prudentially discussed in the paper.