China, a nation suffering from the fallout of years of runaway real-estate speculation, is reportedly considering joining the ranks of major countries that impose a tax on property values.
President Xi Jinping is pushing to establish a nationwide property tax in China as early as 2025, a proposal that has drawn strong pushback from many within the nation’s governing party, according to a report in The Wall Street Journal.
Citing sources “with knowledge of government deliberations,” the newspaper said the new tax was an effort to curb rampant real-estate speculation in China that has driven up prices far beyond the country’s actual economic growth levels.
Pushback from party elites and other members may force Xi to reduce the scale and scope of his original proposal. Instead of a limited trial run in 30 cities, the government is now planning to test the policy in only 10.
The country has already tested a similar policy in a couple of cities, and leaders are now looking to expand it more broadly. Shanghai and other big cities could be the next guinea pigs for the policy, the Journal reports, although specific areas had yet to be decided. The policy could later be expanded to the country at large.
The news comes as one of China’s largest real-estate developers, Evergrande, continues to face steep business consequences for its debt-fueled expansion in recent years.
The rest of the Chinese economy has felt the impact as well. The Journal reports that home sales are falling, and that the slowdown in real estate heavily curbed China’s economic growth in the third quarter of the year.
Government officials expect a property tax to make it less desirable for investors to treat real estate as a speculative investment in China, according to the report.