Tax revenue growth in China's property market dipped last year, ending several years of 40 percent-plus increases as government measures to drive speculators out of the market gained traction, China's tax authority said yesterday.

 

Taxes levied on real estate increased 31.3 percent in 2005, 14.4 percentage points below the level a year earlier, the State Administration of Taxation said on its Website. Total taxes collected during the year were not revealed.

 

"The central government's tax policies aimed at curbing the runaway property market and advancing steady development have borne fruit," the tax authority said.

 

China began increasing housing taxes in June. The measures included a 5.5 percent tax on the value of an apartment sold within 24 months of ownership.

 

Shanghai, the target of the central government's regulatory measures, also doubled the deed tax on apartments considered to be in the luxury property range. As a result of these austerity actions, the city's property prices started to drop in the second half of last year.

 

Even with the slowdown, the real estate industry was a huge earner for the government -- and the biggest gainer on a percentage basis.

 

Taxes collected from the sector topped 519.1 billion yuan (US$64.56 billion) in the five-year period ending 2005 and grew at an annual rate of 41.4 percent, the tax regulator said.

 

Property tax growth outpaced the average 19.5 percent rate of growth for all taxes during the period.

 

Real estate taxes accounted for 5.9 percent of China's total at the end of the five-year period, up 2.9 percentage points from the beginning of the period.

 

(Shanghai Daily March 14, 2006)