There is no direct relationship between property tax and housing prices, real estate tycoon Ren Zhiqiang claimed at a forum held in Tsinghua University recently. The remarks from Ren, who is well-known in China for his controversial comments about high housing prices, have sparked heated debate.

Many people regard property tax as one of the methods to adjust house prices. Early in 2003, when house prices started to rise rapidly, some experts called for property tax to be levied in order to restrict sales and control the rising prices.

But there is some doubt as to whether property tax can control housing prices. The government does not want the tax to have the effect of reducing prices. The economy is still facing downward pressure and the government hopes a recovery in the real estate market can help boost domestic demand and economic growth.

The government will start to levy the property tax sooner or later. It will not directly copy the same model as in Western countries.

The government is likely to consider levying a tax in big cities at first, before expanding it to smaller cities.

There may be no direct connection between property tax and housing prices in the short term. But in the long term, there might be.

The author is Zhao Xiao, an economist.

Southern Metropolis Daily