In an attempt to curb runaway investment, China will drastically
raise land fees and taxes, the authorities said yesterday.
In its latest directive, the Ministry of Land and Resources
ordered that compensation be doubled for human displacement
relating to new developments.
The land use fee for new construction projects shall also be
doubled, the ministry announced. The current charges vary from 5
yuan (US$63 cents) to 70 yuan (US$8.78) per square meter.
The government also intends to triple taxes on the use of urban
land, which currently stands at 1.2 yuan (US$15 cents) per square
meter.
The ministry estimates that the new policy may push up the price
of some industrial land by 40 to 60 percent. However, developers
will be able to absorb the rise, given the policy's results in test
cities.
The ministry said higher land prices and fees would check
excessive land redevelopment for industrial projects and force
local governments to improve project viability.
China posted an economic growth of 10.9 percent in the first
half 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
has twice raised the benchmark interest rate this year and the
government has clamped down on unauthorized investment
projects.
The government believes that checking excessive credit and land
supply growth 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 punishments for local officials
involved in illegal land transactions, more emphasis placed on
safeguarding the interests of farmers losing their land, and
setting 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 under supervision by higher
authorities and local legislative bodies.
Under this policy, the government will raise taxes from
investors for land use, which will be used for the protection and
development of farmland.
There will also be a ban on leasing land from farmers for
construction purposes, a back-door tactic increasingly used by
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.
(China Daily September 8, 2006)