“China to Delay Property Tax After Government Disputes, Century Weekly Says” plus 2 more |
- China to Delay Property Tax After Government Disputes, Century Weekly Says
- Property owners see shifting tax burdens during recession
- Conn. agency recommends end to several tax credits
| China to Delay Property Tax After Government Disputes, Century Weekly Says Posted: 03 Jan 2011 09:05 PM PST China may delay a property tax following disputes among government departments, the Century Weekly magazine reported, citing an unnamed person close to the Ministry of Finance and state tax bureau. Real estate stocks climbed the most in two weeks. China has pledged to speed up testing the property taxes to curb foreign capital and cool home prices. Some analysts expected Shanghai to begin a trial at the start of 2011, the Oriental Morning Post reported today. Lou Xiaohui, a spokeswoman for the finance ministry, and Sun Ruibiao, a spokesman at the state tax bureau, didn't return two calls made to each of their offices seeking comment. The gauge tracking property stocks on the benchmark Shanghai Composite Index slumped 28 percent last year, the most among five industry groups, amid concerns that the government may impose more curbs after home prices climbed for 18 months. The real estate measure climbed 5.2 percent at the 3 p.m. close in Shanghai, the most since Dec. 21. "The government must have taken note of the market performance and concerns about the timing of the new property tax," said Xue Jianxiong, a Shanghai-based analyst at China Real Estate Information Corp., which provides property data and consulting services. "The property market usually enters a 'winter' period at beginning of the year, so there isn't an immediate need for the tax with an expected slowdown in sales." New Tax Officials in Shanghai and Chongqing have submitted modifications to their local tax system to include residential transactions, Century Weekly reported. The central government plans to combine the new property tax with the existing land levy, the magazine reported. China Vanke Co., the country's biggest publicly traded developer, rose 7.1 percent to 8.8 yuan, and Gemdale Corp. soared by the daily limit of 10 percent to 6.8 yuan. "Speculations about the delay in the introduction of the property tax helped trigger the rally," said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages about $120 million. "Property prices are still at high levels after a year's crackdown and that has led some investors to believe that prices won't come down and property stocks are much undervalued." Further Gains China, which initiated real estate taxes in October 1986 while exempting non-commercial properties, will now extend the levy to individuals for the first time, the magazine said. China's December home prices rose the most in at least six months, according to SouFun Holdings Ltd. Residential prices climbed 0.9 percent from November, with gains recorded in 82 of 100 cities, SouFun said in an e-mailed statement. The country's biggest real estate website owner, which started tracking the data since July, usually releases its data ahead of the government's figures in the middle of each month. China suspended mortgages for third-home purchases last year to cool property prices. In October, the People's Bank of China increased interest rates for the first time in three years and raised borrowing costs for a second time on Dec. 25. Premier Wen Jiabao said in a National Radio broadcast on Dec. 26 that measures to curb the country's property market weren't well implemented and reiterated his goal for home prices to return to a "reasonable level" during his term, which ends in 2012. "China property is the cheapest property sector around Asia," said Nicole Wong, a property analyst for CLSA Asia- Pacific Markets. "Investors are starting to feel that risk- reward is looking pretty good." --Bonnie Cao. With assistance from Zhang Shidong and Jiang Jianguo in Shanghai. Editors: Linus Chua, Chitra Somayaji To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at +86-21-6104-3035 or bcao4@bloomberg.net To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| Property owners see shifting tax burdens during recession Posted: 04 Jan 2011 11:41 AM PST Posted: 2:48 pm Tue, January 4, 2011  Mark Haveman Association: NAIOP/Minnesota Taxpayers Association Editor's note: The views expressed in the Association Update columns do not necessarily represent the views of Finance & Commerce. In the long history of sleepy and sparsely attended truth-in-taxation hearings, one stands out. On a December night in 1993, nearly a thousand citizens jammed the auditorium at St. Paul Central High School to protest proposed property tax increases as high as 40 percent. A conga line of irate homeowners waved their property tax bills demanding explanations. While most of the attention focused on government spending and levy increases (which were actually fairly modest), another influential cause of the property tax increases largely flew under the radar. A major commercial real estate recession had significantly depressed business property values. Because property values only distribute tax burden, not create it, some taxes could normally be expected to shift to other properties that were increasing in value, stable or even declining in value albeit at a lower rate. But this shifting was compounded by Minnesota's hyper-classified property tax system. Unlike an unclassified property tax system, where different types of property are all taxed uniformly, a classified property tax system treats different types of property differently. The packed auditorium provided the answer. Minnesota's history of subsidizing homeowners through preferential property tax class rates extends back almost 100 years. We are certainly not alone; most states subsidize homeowner property taxes in some way. It's easy to see why: Minnesota's classified property tax system ably protects homeowners when property values are stable or appreciating, which is the general state of affairs. But this popular policy also has a dark side. Aside from inherent accountability problems, these same protections create potential whiplash conditions during recessions. The price of this "homeowner protection" is greater tax volatility and higher burdens when economic conditions deteriorate and the pain of property taxes is felt the most. Nearly 20 years later, similar dynamics are at work. According to the Minnesota Department of Revenue, commercial property values statewide are down 6 percent in 2010. Even though home values statewide have declined by nearly the same amount (5.5 percent), this will not offset the leverage effects of classification. The basic math of classification causes commercial taxable value to rise faster than residential taxable value in good times but fall faster in bad times, putting pressure on homeowners' property taxes. The degree and amount of burden shifting will vary significantly from place to place, but homeowners in areas featuring the strongest stabilization of home values are positioned to receive the biggest surprises. Fortunately, property tax reform enacted a decade ago significantly reduced the degree of leverage and subsidy in the system. Business property taxation went from four times that of homesteads to about two times. For any politicians regretting the reform's class rate compressions (which reduced the amount of classification in the tax system), we encourage them to imagine what the public outcry would be today if the property tax system was poised to shift two times even more burden. Nevertheless, homeowners aren't happy at all with the current state of affairs and are demanding action. One likely proposal will be to return to days past, decompress class rates and restore historical levels of property tax subsidization. Doing so would not only be bad for business at a time when jobs are priority one, it also would sow the seeds for greater tax volatility and citizen anger in the future. Mark Haveman is executive director of the Minnesota Taxpayers Association. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| Conn. agency recommends end to several tax credits Posted: 04 Jan 2011 04:53 AM PST , On Tuesday January 4, 2011, 7:53 am EST HARTFORD, Conn. (AP) -- Several Connecticut tax credits and property tax abatements have a negative or limited impact and should be abolished, the state Department of Economic and Community Development said in a report to the legislature. The report recommends the elimination of several tax credit programs, such as a business tax credit in enterprise zones that the state agency said has had no effect on economic development, and another credit for taxes paid by manufacturers in enterprise zones criticized for creating too few jobs. Those recommendations have stirred some opposition. State Rep. Selim Noujaim, R-Waterbury, said Monday his 26-year-old family-run machine shop in Waterbury has been made possible by the establishment of enterprise zones. "It is very costly to do business in Connecticut and the ability of businesses to compete is going to be more difficult for manufacturers," he said. The Department of Economic and Community Development said a few tax credits have a significant impact. For example, the agency recommended keeping the Urban and Industrial Site Reinvestment tax credit, which allows a credit for investments of at least $5 million in a qualified urban or industrial project or at least $50 million in a municipality approved by the economic development commissioner. Commissioner Joan McDonald said Monday the site reinvestment credit works well because of the agency's oversight. A business may not initiate a qualifying project without the commissioner's approval and it must demonstrate that the incentives have an economic need. For all tax credit programs applied to corporate, insurance premiums and unrelated business taxes, the state forfeited revenue of $1.64 billion between 1989 and 2007, the report said. Corporate tax credits have jumped 87 percent between 1995 and 2007, to nearly $109 million, the report said. The legislature, which called for the report, begins its 2011 session Wednesday. The top item on its agenda will be trying to close a deficit of as much as $3.67 billion for the fiscal year beginning July 1. Not all tax credits were intended to promote Connecticut's economy. Credits target quality of life issues such as traffic reduction, air pollution abatement, child care, clean alternative fuels, employer-assisted housing, grants to higher education and neighborhood assistance. McDonald said she wasn't aware of the traffic reduction tax credit, which may be applied against a corporation business tax by companies that participate in traffic reduction programs to promote clean air. The Department of Economic and Community Development said the credit peaked at nine claims in 2001 and declined to two in 2005. There are other little-used credits. Research and development grants to colleges and universities had no more than two claims each year since 2001; the Small Business Administration Guaranty Fee credit has been taken by six or fewer firms since 2003, and the number of apprenticeship training credit claims amounted to fewer than 15 since 2003 and has declined from a high of 78 claims in 1999. But credits that are popular with businesses include a 5 percent credit of the amount paid or incurred by a business for a new capital investment such as machinery, a 100 percent credit on property tax paid on electronic data processing equipment and a research and development tax credit. McDonald said the research and development credit is among the most important to Connecticut's economy. However, the report said many businesses are not using the credit and are carrying it forward from one year to the next, providing no economic benefit. Follow Yahoo! Finance on ; become a fan on Facebook. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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