BEIJING (Reuters – China could increase pilot testing of a Zhejiang property tax, a former government specialist was quoted by an official media outlet as saying on Sunday. It is now that China is getting closer to adopting its long-discussed levy.

China began a pilot programme for taxation of property in Shanghai, Chongqing and Chongqing back in 2011; experts suggested previously that testing could be extended to Shenzhen city or Hainan province.

President Xi Jinping demanded Friday that progress be made on a property-tax, which could reduce wealth inequality as the country attempts to reach its “common prosperity” goal by midcentury.

According to China Property News (managed by the ministry of housing), Jia Kang was the ex-director of China’s Academy of Fiscal Sciences. She stated that China could use system innovation to increase the property tax scope and move forward with tax legislation.

China’s consideration of introducing property taxes has been ongoing for more than a decade. However, it is being resisted by many stakeholders. Local governments rely heavily on income from land sales.

However, this tax might help to curb excessive speculation in housing markets, which have come under intense scrutiny worldwide as huge developer China Evergrande Group faces a liquidity and debt crisis.

Jia proposed that the property tax trial be extended to Zhejiang, a wealthy province in eastern China.

China has a wide range of real estate prices. They are much higher in China’s Tier One cities, such as Beijing and Shanghai, than they are in China’s hinterland markets.

Jia stated that third and fourth-tier cities wouldn’t be included in the first property tax trial batch. He also said that property tax systems should adjust to local circumstances.

China started collecting property tax in Shanghai in 2011 on some high-end residences.

Although the Chinese government indicated in March its 2021-2025 development plans that it will push for legislation on property taxes over the next five year, there were no references to such tax in China’s 2020 legislative agenda.