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Property Law Aims to Remove Unequal Protection
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The country's top legislature yesterday decided to submit the draft property law and corporate income tax law for a vote at the next full session of the National People's Congress (NPC) in March.

The decision, reached at the 25th session of the NPC's 10th Standing Committee, finally boosts the marathon legislative process for the controversial property law to its last lap after seven readings. No previous law has had more than five readings.

The property bill had its first reading in 2002 and was withdrawn from the NPC full session in March amid worries the draft might undermine the legal foundation of the socialist system public ownership.

If passed in March, it will be the country's first law to protect both public and private ownership.

Yao Hong, director of the NPC Law Committee's Civil Law Office, refuted worries it would undermine China's socialist market system, claiming the draft is in keeping with the country's Constitution.

She said although the Constitution stipulates that public ownership should be the leading force of the socialist market economy, of which the private economy is a major component, in no way is it indicated that the two ownerships should not be equally protected.

"It's obviously unfair if compensation for state-owned property is higher than that for private-owned," Yao said. "It would seriously harm the public's interests."

After discussion, the committee agreed that the latest draft, emphasizing equal protection of state, collective and private property, answers the concerns of all parties, and decided to submit it to the NPC full session.

In contrast to the controversial property law, the corporate income tax law, aiming to unify income tax rates for domestic and foreign companies at 25 percent, faced little obstacle in review.

It is the draft's first reading, but members considered it good enough to be submitted to the next NPC full session. Usually, a draft takes at least three reviews before being forwarded.

Legislators agreed that the tax rate is appropriate and that this revision should proceed without delay as favourable tax policies for overseas companies discriminate against local enterprises.

Companies in China currently pay income tax at a nominal rate of 33 percent. However, due to various tax waivers and incentives, foreign businesses actually pay about 15 percent while domestic enterprises pay 24 percent on average.

Shi Yaobin, director of the Ministry of Finance's Tax Policy Department, said the law would not result in a sharp decrease in foreign investment, as a stable society, vast market potential and low labour costs would maintain their attraction for investors.

In addition, the draft offers foreign businesses a grace period of five years, and says any favourable polices will apply to both local and overseas companies equally.

If passed, the law is expected to take effect on January 1, 2008.

(China Daily December 30, 2006)

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