Thursday, 10 December 2009
China Squeezes Property Speculators With Tougher Tax Penalty
The government will impose a sales tax on homes sold within five years of their purchase, increasing the time period covered by the charge from two years, the State Council, the nation’s cabinet, said yesterday after a meeting chaired by Wen. China reduced the penalty period of the tax to two years from five in January of this year to stem falling prices.
Subscribe to:
Post Comments (Atom)
2 comments:
China Squeezes Property Speculators With Tougher Tax Penalty
By Bloomberg News
10 December 2009
China issued policies to curb property speculation after home prices rose at the fastest pace in more than a year and Premier Wen Jiabao pledged support for affordable housing.
The government will impose a sales tax on homes sold within five years of their purchase, increasing the time period covered by the charge from two years, the State Council, the nation’s cabinet, said yesterday after a meeting chaired by Wen. China reduced the penalty period of the tax to two years from five in January of this year to stem falling prices.
A record $1.3 trillion of bank lending that helped revive Chinese economic growth to 8.9 percent in the third quarter has also fuelled concerns of a bubble in the nation’s property market. Home prices in 70 major Chinese cities climbed at the fastest pace in 14 months in October, according to government data.
“The Chinese central government wants to gradually control the bubble in the real estate market,” Andy Xie, former Morgan Stanley chief Asian economist, said by phone.
November sales for China Vanke Co., the nation’s biggest developer by market value, rose 46.5 percent from a year earlier to 5.23 billion yuan ($766 million), the company said this week. Sales in the first 11 months rose 36.2 percent. A measure of property developers traded in Shanghai has more than doubled this year.
Property Speculation
Premier Wen said Nov. 28 in Shanghai that the government will support the development of affordable housing for low- and middle-income earners, the official Xinhua News Agency reported. Property speculation must also be suppressed to promote a healthy real-estate industry, Xinhua cited Wen as saying.
China will curb “speculative” home purchases, Xinhua reported yesterday before the State Council announcement, citing National Development and Reform Commission Chairman Zhang Ping.
China announced plans to reduce the real estate sales tax and extend preferential lending rates for buyers of second homes in December 2008. Prices in 70 major Chinese cities fell for the first time on record that same month and didn’t post an increase until June this year, according to government data.
“The reinstatement of the property tax period to five years is an early signal that the government is concerned about speculative demand in the property market,” Jun Ma, Deutsche Bank AG’s Hong Kong-based chief economist for Greater China, said by phone.
China’s economy still faces many difficulties and challenges next year, yesterday’s State Council statement said. The nation needs to continue expanding the role of consumption in driving economic growth, according to the notice.
The government will also scale back preferential tax rates offered for purchases of vehicles with engines of 1.6 liters or smaller, according to the statement.
China in January cut the sales tax on the vehicles to 5 percent from 10 percent between Jan. 20 and Dec. 31. It introduced the incentive to revive demand after auto sales rose at the slowest pace in a decade last year. The rate will be 7.5 percent next year, the statement said.
Government support helped fuel a 42 percent jump in nationwide vehicle sales to 12.2 million in the year through November, putting China on course to surpass the U.S. as the world’s largest auto market.
China’s full-year auto sales may be about 13 million, according to Booz & Co., which advises carmakers and investors in China.
Alternative-Energy Cars
China will also pick five cities for trials of subsidies designed to encourage individuals to buy alternative energy and energy efficient cars, the State Council said. The government will increase automobile trade-in subsidies to between 5,000 yuan and 18,000 yuan, according to the statement.
“The government is refining its policy to promote domestic consumption,” said Deutsche Bank’s Ma.
China will extend subsidies for purchases of automobiles, appliances and farming equipment in rural areas, according to the statement, which didn’t give a time frame for the program.
China will continue appliance trade-in subsidies beyond May 2010, when it had been set to expire. Subsidies for motorcycle purchases will be extended to the end of January 2013, the State Council said.
Yesterday’s announcement came after the central government held its annual economic work meeting to plan policies for the coming year. The government said it will add flexibility to some monetary economic policies next year and rein in new investment projects after the conclusion of the meetings on Dec. 7
Post a Comment