THE country needs to replace its property tax regime with one similar to that used in some Western countries, deputy director of the State Administration of Taxation Song Lantan said Friday in an on-line question and answer session.

China levies two forms of tax on property, Song said. A real estate tax charges domestic landholders based on the original price or rental income of a piece of land, while an urban land use tax charges foreign holders based on the area of their property.

Individuals using property for residential purposes are exempt from both taxes, he said.

In some Western countries, a property tax is levied according to a property’s market value, Song said, adding China needs to replace its two land taxes with such a system. But he stressed implementation of such a change would be gradual.

“We are constantly researching and preparing for reform of real estate taxes,” he said.

Responding to another question from an online participant in the session, Song said conditions are “not yet ripe” for a repeal of China’s tax on deposit interest income. He acknowledged that some say the tax is a burden on low-income savers, but said “some positive functions of the interest tax cannot be ignored.”

Revenue from the tax is used to finance social insurance for jobless workers and low-income individuals, Song said.

The tax has a greater impact on high-income savers with large deposits and thus serves to address income inequality, he said, adding that the tax also plays a role in encouraging consumption and domestic demand.

(SD-Agencies)