Recently, the Ministry of Finance, the Ministry of Natural Resources, the State Administration of Taxation, and the People's Bank of China issued the "On the transfer of income from state-owned land use rights, special income from mineral resources, sea area use fees, and uninhabited island use fees." Notice on Issues Related to the Transfer of Tax Revenue to Tax Departments for Collection."

One stone stirred up a thousand waves. The market is most concerned about the change in the collection method of land use rights transfer revenue (hereinafter referred to as land transfer fee). Some even think that this move will end the history of land finance and truncate the history of land finance. The chain of interests between local finance and land has changed the logic of real estate market operation.

The author believes that the change in the collection method of land transfer fees has not changed the operating logic of the real estate market in the short term, and there is no need to over-interpret it. However, in the medium and long term, the standardization of land transfer fee management provides basic conditions for further reforms. .

It can reduce local non-compliance.

In fact, the introduction of this reform measure is not sudden. As early as the Third Plenary Session of the 19th CPC Central Committee, the "Deepening Party and National Institutional Reform Plan, which stipulates that the tax department "assumes various tax and non-tax revenue collection and management responsibilities within its jurisdiction."

On July 20, 2018, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Reform Plan for the National and Local Tax Collection and Administration System." Among them, it has been mentioned: in accordance with the principles of convenience and efficiency, reasonably determine the scope of the transfer of non-tax income collection and management responsibilities to the tax department, and transfer mature non-tax income items that are retained in accordance with the law and suitable for transfer in batches, and gradually promote .

The author believes that the reason why some people over-interpret this policy is largely due to the new round of rising housing prices in some cities in my country after the epidemic. In the context of rising housing prices, all real estate-related policies issued by the central government are interpreted as curbing housing prices. The discussion on real estate taxes in mid-May and the discussion derived from the change in the land transfer fee collection method fall into this phenomenon.

This change in the way land transfer fees are collected does not change the situation in which local governments control land revenue. Land transfer revenue is still classified as government fund revenue, and the right to use it still belongs to local governments. Changes in the way land transfer fees are collected can improve the transparency of this revenue and make it more standardized. When the management of land transfer fees becomes increasingly transparent and standardized, it provides a basis for regulating the debt behavior of local governments and can effectively reduce non-compliance behaviors of local governments.

Looking at the history of the past ten years or so, we can clearly see the policy guidance of the central government on the management of land transfer fees. Before 2007, land transfer revenue had always been included in extra-budgetary “special account management”.

The 2007 "Notice of the General Office of the State Council on Regulating the Management of Revenues and Expenditures from the Transfer of State-owned Land Use Rights" stipulates that all land transfer revenue and expenditures shall be included in local fund budget management, and "two lines of revenue and expenditures" will be implemented on a trial basis.

In 2009, the Ministry of Finance issued the "Opinions on Further Strengthening the Budget Management of Local Government Funds", and the government fund budget was officially approved by the National People's Congress.

In 2010, the Ministry of Finance issued the "Interim Measures for the Management of Government Funds" to strengthen the management of all aspects of land transfer revenue and expenditure, and land transfer revenue and expenditure were further supervised and constrained.

In 2015, the new "Budget Law" officially incorporated the government fund budget into our country's government budget system, making off-budget operations a thing of the past.

In 2016, the Ministry of Land and Resources and the Ministry of Finance issued the "Notice on Strengthening the Guarantee of Land Remediation Work after the Compensated Use Fees for Newly Added Construction Land Are Transferred to the General Public Budget". The paid land use fees are transferred to the general public budget.

It can be seen from this series of regulations on the management of land transfer fees that the management of land transfer fees has been moving towards "standardization and transparency".

Steadyly advancing the reform of land transfer fees

Among various views on the impact of changes in land transfer fee collection methods on the real estate market, it is believed that land finance is the main factor driving the rise in housing prices in our country. , this is a fact that cannot be ignored. To change the vicious cycle of housing prices only rising but not falling, local finance must change its high dependence on land revenue. However, cutting off the interest relationship between local government and land involves not only the adjustment of interests, but also financial stability, which affects the whole body. To reform the current status quo of land finance and land finance, we should follow the principle of "positive and prudent", otherwise haste will make waste.

In the author's opinion, the central government has been planning the reform of land transfer fees in accordance with the principle of "active and prudent". In 2020, the State Council issued the "Opinions on Adjusting and Improving the Scope of Use of Land Transfer Revenue to Prioritize Support for Rural Revitalization". The document clearly stipulates that "the proportion of land transfer proceeds used for agriculture and rural areas in that year will gradually reach more than 50%." This move can not only weaken land finance, but also narrow the gap between urban and rural areas and optimize our country's economic structure. This is the optimal solution to land transfer fee reform after fully considering risks and benefits.

Further reform of land transfer fee management needs to be matched with the resolution of local debt risks and other reform measures. These conditions are not available in the short term.