China should up property tax on 3rd homes : Official

BEIJING (REUTERS) - China should increase its home ownership tax on those with three or more properties to target speculators and as part of measures that replace current purchase restrictions, Hu Cunzhi, vice minister of Land and Resources said on Saturday.

The remarks come after the Chinese government warned this month it could tighten controls to calm frothy home prices, including speeding up expansion of a pilot property tax and a 20 per cent capital gains tax.

Local governments are expected to detail how the two taxes would be enforced by the end of this month.

"Now, if we can apply economic or taxation methods to curb the property market as soon as possible, the campaign to control property prices would have a relatively good effect," Hu told a forum.

"The method that deserves the most consideration is to raise property tax on those with third or more homes," said Hu, adding that such a move would boost supply of homes and stabilise prices.

Current property controls that include restricting home purchases have a quick but negative effect, Hu added, without elaborating.

The cities of Shanghai and Chongqing were the first Chinese cities to enforce property ownership taxes of between 0.5 per cent and 1.2 per cent on second or more homes in early 2011.

Beijing, Shenzhen, Hangzhou and Wuhan are likely to be next in line to tax home owners, Chinese media have said.

Chinese home prices more than doubled in 2009 after Beijing rolled out a massive economic stimulus package to combat the global financial crisis.

It followed with a string of measures to crack down on property speculators and take the heat out of the market, but average prices across the country have begun to rise again recently after falling for ten months.