The decision to pilot the tax on all types of property in selected regions for five years – most likely important cities such as Shenzhen and Hangzhou– was taken last month. It is seen as vital to reforming the country’s bloated property sector, a concrete-and-glass divide between China’s haves and have-nots which has been personified by the woes of the heavily indebted developer China Evergrande.
The property tax is controversial because local governments rely on land sales for at least 40% of their revenues. This has encouraged an aggressive sales policy, aided and abetted by property developers happy to take on massive debts to buy the land and build ever more apartment blocks for buyers convinced the market is a one-way bet.