Experts have doubts about new land fees
(China Daily)Updated: 2006-11-22 09:09
A plan to slow investment in fixed assets by doubling the land-use fee for new construction projects next year may have little impact on the country's burgeoning property market, real estate watchers said a day after the increase was announced.
The fee-increase is part of a series of measures aimed at protecting arable land, discouraging land abuse and curbing investment in the super hot fixed-assets market, according to a joint statement issued jointly by the Ministry of Land and Natural Resources, the People's Bank of China and the Ministry of Finance on Monday.
Local governments will also lose their share of the revenue generated by the fees under a new formula that will divert the funds to the provincial and central governments.
However, analysts said local governments would simply find new ways to benefit from land sales and that the increased fees were still just a drop in the bucket compared with soaring land prices.
The current land-use fee ranges from 5 yuan to 70 yuan per square metre, depending on the location.
For example, in a desirable location like Shanghai's Changning District, the land use fee will grow to 140 yuan per square metre from 70 yuan per square metre (US$17.5 to US$8.75).
Under the new rules, land-use fees will also be levied on illegally expropriated land in a bid to prevent local governments from underreporting land-development deals. Experts say some local officials pocket the proceeds of illegal land sales.
Under the new fee-collection formula, provincial-level finance departments will take 70 per cent of the revenue from land-use fees. The central government will take the rest.
The new formula will take away the main incentive for local governments to
expropriate arable land, said Yan Jinming, a professor at Renmin University.
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