China to ‘Gradually’ Implement Property Tax System, Wen Says

China should “gradually” establish a property taxation system that covers real estate transactions and ownership, Premier Wen Jiabao said during a visit to the finance ministry yesterday.

The comments were published in a statement posted on the central government’s website. In its more than two-year effort to curb the property market, the government has raised down-payment and mortgage requirements, imposed a property tax for the first time in Shanghai and Chongqing, increased building of low-cost social housing, and placed home-purchase restrictions in about 40 cities.

“We still believe that the property tax is the policy most likely to be launched in 2013,” Haitong International Securities Co. analysts, led by Frank Miao, wrote in a report today, referring to an expansion to the property tax trials. “It will become a long-term mechanism that restricts holding of multiple properties and eventually increases local governments’ revenues.”

An index tracking Shanghai-traded developers fell 1.3 percent at the noon break, while the benchmark Shanghai Composite Index lost 0.4 percent. Poly Real Estate Group Co. dropped 1.9 percent to 13.78 yuan.

Many Chinese cities are preparing to introduce property tax trials, the China Securities Journal reported on Nov. 16, citing unidentified people. The central government hasn’t yet decided on their scale and timing, it said. China’s new home prices climbed in 53 of 70 cities the government tracks in November from the previous month, compared with 35 in October, according to data from the National Bureau of Statistics Dec. 18.

Wen’s comments on the property tax yesterday were “neutral” on developer stocks as the remarks were “within expectations,” Tian Shixin, a Shanghai-based analyst at BOC International China Ltd., said by phone.

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