A new pledge by the authorities here in China to expand property taxes is drawing warnings by some observers, who are warning the government not to misuse the property tax program to artificially push down housing prices.

 

　　CRI's Shen Chengcheng explains.

 

　　China's State Administration of Taxation has recently issued a circular that it will research the possibility of expanding the property tax pilot programs.

 

　　The comment is the latest in a string of official statements, in which authorities have vowed to implement a property tax plan.

 

　　The plan is currently being used in the cities of Shanghai and Chongqing.

 

　　However, despite repeated statements, the government has yet to make any substantial moves regarding the property tax.

 

　　Business commentator Wen Xing says this is because the pilot programs in Shanghai and Chongqing didn't exactly fulfill their goal of cooling the housing market.

 

　　"We don't know how much tax revenue the government has collected and whether the pilot programs are effective or not after they have been implemented in Shanghai and Chongqing for a year. However, one thing is for sure is that the trend of housing prices going up remain intact."

 

　　The pilot tax programs in Shanghai mainly targeted the ownership of multiple houses while the Chongqing trial programs focused on taxing high-end housing.

 

　　But due to limited rates ranging from 0.5 to 1.2 percent, the taxes imposed were considered too low to be effective in keeping local housing prices in check.

 

　　Chen Yuyu is an economic professor at Peking University.

 

　　He says the property tax can't be tied together with the housing prices.

 

　　"Property tax shouldn't become a tool of regulating the housing industry. Rather it should be a properly-planned local tax to pool money for its long-term development. We shouldn't make it an opportunist tool to push down housing prices."

 

　　However, some analysts do believe the property tax program will be expanded and the expansion plan is possibly be issued in the third or fourth quarter of the year.

 

　　For CRI, I'm Shen Chengcheng.