Description/Abstract
The general public and even some scholars challenge the legitimacy of levying the property tax under conditions where land is state-owned and multi-year land-use fees have already been collected at the time of house sales. This challenge points to the legal- theoretical foundations of property taxation: the core issue is whether the rights and economic utility of China's construction land-use-rights (CLUR) are sufficient to be treated as the object of property tax levy. China's Civil Law stipulates that CLUR holders have the rights to possess, use, and profit from the land during their use period, as well as the right to transfer the use rights; they can establish mortgages and easements, making them the ultimate beneficiaries of property value. Therefore, China's CLUR function as "ownership rights" and represent a special form of ownership. Even if CLUR are recognized only as a type of superficies, from the perspective of comparative tax systems, long-term superficies should be taxed as land ownership; otherwise, superficies holders would consume public services for extended periods but pay little taxes, which violates the principle of benefit taxation and creates local fiscal traps. Therefore, property taxation has sufficient legal-theoretical foundations in China's legal system. After its adoption, the property tax should coexist with land-use-right transfer fees, as they cannot substitute for each other; as for how to account for the portion of property tax that may have been included in land transfer fees already paid under the current system, this should be clarified in tax design through appropriate arrangements. Similarly, the property tax and land-use-right renewal fees cannot substitute for each other, with the latter more reasonably levied as an "annual rent."
Document Type
Working Paper
Date
2-4-2026
Keywords
Property tax, land ownership, land use rights, land rent, land transfer
Language
English
Series
Working Papers Series
Acknowledgements
Authors’ Note: This English version is only the text of the original paper, without the detailed annotations and notes of all types. For those, please refer to the Chinese version that is attached as the Appendix. Wherever discrepancies arise between the two versions, interpretation is to be based on the original. The reason that we work out an English version of the paper from its original text in Chinese is to keep a record of its writing. This paper went through a long process from 2018 to 2023. As a collaboration between two public finance scholars and a legal scholar, this paper was written to answer a challenge about the legitimacy of the property tax in a country/statutory context where land is owned by the sovereign state, not owners of housing, which is not limited to China. The current political environment in China does not allow publication of such a paper; thus, we believe it is worthwhile to publish it in English as an open working paper.
Statement on Use of AI: The authors used ChatGPT to assist with the translation of several sections from Chinese into English. All content was reviewed, verified, and edited by the authors, who take full responsibility for the accuracy and integrity of this work.
Disciplines
Economics | Finance | Public Affairs, Public Policy and Public Administration | Public Policy | Taxation
ISSN
1525-3066
Recommended Citation
Ban, Tianke; Hou, Yilin; and Zhang, Ping, "On the Legal-Theoretical Foundations of Property Taxation under State Ownership of Land" (2026). Center for Policy Research. 521.
https://surface.syr.edu/cpr/521
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Additional Information
CPR Working Paper No. 283