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View of Shanghai (archive): Achieving “common prosperity”
Photo: Angelika Warmuth / dpa
In terms of tax policy, Germany is likely to tread on the spot in the coming years, given the widely divergent positions of the traffic light negotiators.
China, on the other hand, is apparently serious about its renaissance of communism, which began a few weeks ago - specifically with a tax reform that is supposed to put more burdens on top earners in the future.
The government wants to "share the cake" by sensibly adjusting the incomes of top earners and increasing those of the lower income groups, reports the official Xinhua news agency.
To this end, changes in tax collection are to be intensified in order to increase revenues.
This will be done in a targeted manner, as part of an effort to achieve "common prosperity" in the long term.
Real estate and wealth tax in discussion
The goal is therefore an “olive-shaped” distribution structure for incomes with a large middle and two small ends, according to the report.
However, China's tax policy should not be misinterpreted as "robbing the rich to help the poor," according to the agency, which claims to have questioned the relevant departments and relevant people about the plans.
"Shared prosperity" is a political push by President Xi Jinping to narrow the gap between rich and poor. He has spoken out in favor of “energetically and steadily pushing ahead” a wealth tax. The introduction of a real estate tax is also under discussion. It is seen as a deterrent to speculative buying and cooling property prices, which have soared more than 2,000 percent since the property market was privatized in the 1990s. This has made home ownership unaffordable for many Chinese.
At the weekend, a parliamentary body announced that it would try to introduce a property tax in some regions.
"The announcement came earlier than expected and confirms our longstanding view that China is determined to transform its real estate market," said ANZ Research economist Betty Wang.
The tax is likely to increase the cost of holding real estate assets, which could slow investors' buying of existing properties.
The shares of Chinese real estate companies fell more than three percent at the beginning of the week.
apr / Reuters
