Why China Doesn’t Have a Property Tax (2024)

Across China, many local governments are on the brink of insolvency. Some cities have reduced pay for civil servants. Cuts to municipal health insurance have triggered street protests.

Central government bailouts are a possibility to rescue cities from their deep budget problems, but China hasn’t turned to a source of revenue that would be an obvious option in other countries: property taxes.

In China, where the government owns the land, localities almost never tax homeowners to support services like schools. Cities rely instead on selling long-term leases to real estate developers. Revenue from these land sales has plunged in the past year.

Last month, after a decade-long effort that involved 100,000 workers, China’s central government said it had finally figured out who even owns 790 million apartments and other properties. That knowledge means officials in Beijing could start a nationwide property tax system. But they are not expected to do so quickly. The obstacles range from the technical (it would be complicated) to the economic (it would hurt homeowners at a delicate time for the housing market) to the political (it would expose government officials who own many homes).

The idea of introducing a property tax is not new. The Communist Party’s Central Committee, in many ways China’s highest decision-making body, resolved in 2003: “When conditions permit, a unified and standardized property tax will be levied on real estate.”

Many economists support a real estate tax, notably Lou Jiwei, a retired finance minister who remains an intellectual leader among China’s technocrats. “A real estate tax is the most suitable type of tax as a local tax, and should be piloted as soon as possible after the economy returns to normal growth,” he wrote in February.