Sunday, August 18, 2013

the han party still lacks a coherent country wide Georgio-Marxist land policy

the foundation should be a national policy of ground rent extraction
above  the 90% line if plausible

existing  experiments  with local "property taxation look to be headed
                                                        way off  the correct course

                                               ---  or so it would seem ---

here's a few out takes
 from a recent Global  Parnassian  Press club take away :

"Efforts in China to broaden a pilot program that deploys property taxes
  aimed at taming the real-estate market
                                      are running into difficulties."

" for the past three years the party  instituted a number of property-market control

including property-tax pilot programs in Shanghai and Chongqing,"

"aiming to head off risks of a bubble bursting and to improve affordability."

bubble pre emption is critical
but long run
  affordability is a wrong headed goal.... of course it is !!!

"Proponents say a nationwide property tax
 would increase the cost of holding property"

this is fallacious
a pure ground rent tax  reduces  market prices
 reduces pre existing  re-sale values

" reduces  incentives for speculators to buy"

cutting out the capitalized ground rent everywhere simultaneously
 is perhaps operationalized in real land markets
 only on a wack a mole basis

yes mistakes and losses will pile up

a whole very considerable class of rentier income can be scotched
with no long run curb on development

a land tax indeed would
" providing a more-permanent solution than the government's current reliance on administrative measures. "

property tax is an ambiguous composite of a user fee
 a partial household wealth tax
and a ground rent tax
these three and what ever other objective  might get rolled into a property tax
needs to be mutually articulated and separated

"Such a nationwide tax could also fit into China's pledge to stamp out rampant corruption"

yes by reducing local discretionary sale and credit activity

"The eastern city of Hangzhou and the southern boomtown of Shenzhen could be the next cities to implement the property-tax trial"

 "The State Administration of Taxation  is studying the expansion of the property-tax trials."

"Shanghai levies a 0.4% to 0.6% tax on second-home purchases."

" Chongqing, the tax is levied on existing high-end homes and villas and ranges from 0.5% to 1.2%"

tallying up:
" the taxes are too low and too subject to a complex web of conditions to slow home-price appreciation."

"Shanghai's average new-home prices rose 11.9% in June compared with a year earlier,
while Chongqing's rose 6.8%"

trifles indeed !!!!

such that

"the existing pilot programs in Shanghai and Chongqing, begun in 2011,
 have proved ineffective in holding down costs. "
which a ground rent tax would do
if costs here are market price for lots

" widespread opposition from local governments, officials, property developers,
are barriers to reform. "

just the sign it needs doing  and pronto !!!!!

" increasingly vocal middle class are also a barriers to reform. "
then get it done NOW

"a key meeting of the Communist Party leaders in October"
since its already
" seen as an opportunity to roll out reforms."


spade  work ?

" The housing ministry is  working on a nationwide database
 of homeowner information that would aid the implementation of the tax."

alas not too encouraging so far

but but but

putting in the mere  forms of extraction is still  a first step ....

  one li of a .thousand li journey

key incentive point  to attack:

"Local governments prefer the lump sum revenue from land sales
 to the slim pickings of property-tax income"

optimal answer since its a national tax

 pay the local gub for the "right to inititiate a ground rent extraction"
and again each time rates increase

ie capital payments on  the stream of revenues as they develop

"For China's middle class, a new tax would add to burdens


threaten the value of an asset now  essential for their retirement saving."

add a burden ?
a ground rent tax ?
no not in the long run

but yes it threatens the market value of already owned lots

retirement savings

the answer there is of course the devilish details of an evolving
  national pension system

at any rate

better to strike now
 then later
 when the  massive minute vested interests
                        are onlygoing to get  larger and larger