Taxes, fees on land use increased
(China Daily)
Updated: 2006-09-08 08:39
China will drastically raise land fees and taxes in an attempt to curb
runaway investment, the authorities said yesterday.
In its latest
directive, the Ministry of Land and Resources ordered that compensation be
doubled for people displaced to make way for new developments.
The land
use fee for new construction projects shall also be doubled, the ministry
announced. The current charges vary from 5 yuan (63 US cents) to 70 yuan
(US$8.78) per square metre.
The government also intends to triple tax on
the use of urban land, which currently stands at 1.2 yuan (15 US cents) per
square metre.
The ministry estimates that the new policy may push up the
price of some industrial land by 40 to 60 per cent. But developers can absorb
the rise, according to the experience in cities where the new policy has been
tried.
The ministry said higher land prices and fees would check
excessive redevelopment of land for industrial projects and force local
governments to improve the viability of projects.
China posted economic
growth of 10.9 per cent in the first half this year on the back of a 30-per-cent
growth in fixed asset investment, both of which registered recent-year
highs.
In a bid to prevent a possible economic crisis, the central bank
raised the benchmark interest rate twice this year and the government has
clamped down on unauthorized investment projects.
The government believes
that checking excessive growth of credit and land supply could be an effective
way of cooling the economy.
On Tuesday, the State Council, or the
cabinet, announced macro-control policies aimed at tightening land
supply.
Highlights include tougher punishment for local officials
involved in illegal land transactions, more emphasis on safeguarding the
interests of farmers losing their land, and a minimum price for industrial
land.
The policy also strips local governments of their authority to
spend the money from land sales, and orders that the revenue be incorporated
into local budgets to allow supervision by higher authorities and local
legislative bodies.
Under the policy, the government will raise taxes
from investors for the use of land, which will be used for the protection and
development of farmland.
And there will be a ban on leasing land from
farmers for construction purposes, a back-door tactic increasingly used by some
local governments and investors to dodge taxes on land sales and approvals by
higher authorities.
"The solution to major issues in the economy lies in
deepening reforms of the economic system, but for now, approaching the problems
in land use is the most direct and efficient way," said Sun Wensheng, minister
of land and resources.
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