The rate that Chinese couples divorce recently skyrocketed in Beijing and Shanghai, China’s two most affluent cities, after announcements over increased property taxes. Data from Beijing officials shows 40,000 new divorces in the past nine months. This is a 41 percent increase over the divorce rate in 2012.
Data from China’s center of commerce in Shanghai showed that due to concerns over the higher property taxes, the divorce rate increased by nearly 40 percent compared with the same period in 2012.
But in the southwestern metropolis of Chongqing, where the property tax was not levied, the divorce rate rose by only 7 percent. In March 2013, Chinese authorities announced a nationwide increase in property taxes, taking 20 percent from property owners when they sell their houses.
However, under certain provisions, a divorced couple can sell their real estate under their own name and be exempted from paying the additional tax. According to a report by the Beijing Youth Daily, the divorce rate in the capital is much higher now than four years back. Zhang Dawei, director of research group Centaline in Beijing, told AFP reporters:
“Some people get a divorce just to sell their property and be exempt from paying the property tax; they will soon remarry.”
He added that getting divorced is the only viable way for couples to escape the property tax . Because of sky-high property prices in recent years, the real estate tax could reach hundreds of thousands of dollars if this tax law is fully implemented in all the first-tier cities in China.
In the past, property owners were taxed only 1 or 2 percent; after owning the property for more than 5 years, owners were not required to pay taxes. Zhang Dawei said:
“The divorce rate remained high over the past few years only in cities implementing property purchase limitations and increased property taxes. But policymakers are not likely to plug loopholes in this policy.
“This is a gray area. If a couple wants a divorce, the government will be unable to interfere.”
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