Recent reports from China indicate a sharp decline in the economy, putting local governments in financial distress. Consequently, a draft proposal was released by Dengfeng City in Henan Province seeking opinions on the potential imposition of property taxes and urban land use taxes in Tangzhuang Town. This move sparked significant controversy which led to the prompt removal of the draft proposal.
On October 21st, Dengfeng City in Henan Province issued a document titled “Proposal on the Imposition of Property Taxes and Urban Land Use Taxes in Tangzhuang Town, Dengfeng City (Draft for Consultation),” aiming to levy property taxes on 27 villages (communities) within the 118 square kilometers area of Tangzhuang Town, stretching from Yutai in the east to Guozhuang in the west, and from Zhangcun and Chencun in the south to Tashuimo in the north.
According to the proposed standards, the land in Tangzhuang Town is categorized into three levels, with a tax rate of 3 yuan (RMB) per square meter annually. Property taxes will be calculated at 1.2% of the remaining value of the property or 12% of the rental income.
On October 22nd, officials from the Dengfeng City Taxation Bureau informed The Paper that this is not a new tax category. With the upgrading of Tangzhuang Town from a township to a town, it is now eligible for property tax collection, based on the “Interim Regulations of the People’s Republic of China on Property Tax” issued in 1986.
The report indicates that according to the aforementioned regulations, property taxes are to be levied in urban areas, county towns, established towns, and industrial and mining areas, to be paid by the property owner. The regulations also specify exemptions from property tax, including non-commercial residential properties owned by individuals. Public information reveals that only a few cities such as Shanghai and Chongqing have piloted property tax collection on non-commercial residential properties.
This development immediately sparked controversy. Former investigative journalist, founder of the “Free Lunch” initiative, and initiator of Hangzhou Huakailing Charity Foundation, Deng Fei, posted relevant information on Weibo, questioning the commencement of property taxes. Deng had previously served as an editorial board member and head of the reporter department at “Phoenix Weekly”.
In a reply, Shi Weimin, a lawyer specializing at the Guangdong Nuochen Law Firm, commented, “Property taxes and land use taxes have always been collected on non-residential properties, shops, factories, and warehouses.”
Netizens expressed their concerns, questioning how property taxes could be imposed on land use and discussing issues such as paying taxes on leased land and the necessity of paying taxes on leased long-term properties with deteriorating quality.
Under public pressure, the consultation page was removed on the evening of October 22nd.