Finance Minister Xie Xuren speaks during a news conference in Beijing on Monday, March 7, 2011. [Photo: CRIENGLISH.com/Zhang Xu]

It is premature to expand the property tax program nationwide at present, Finance Minister Xie Xuren said Sunday.

According to the Securities Times, Xie said the expansion of the property tax program depends on the pilot zones' effects and China needs more experience to conduct property tax reform.

China in January kicked off the long-awaited trial property taxation in East Shanghai and Southwestern Chongqing, amid its latest measures to cool off the red-hot housing market.

The property tax is believed to be an effective weapon for local governments to follow the State Council's instructions to bring down inflating housing prices. In late February, the Standing Committee of the National People's Congress (NPC), the country's top legislature, announced China would accelerate its property tax pilot reform and gradually expand to a national level.

According to He Li, chief editor of Caijing magazine, this new tax has not only met people's desires to tackle housing prices, but protects interests of existing homeowners.

However, Shi Zhengwen, professor at the Center for Research in Fiscal and Tax Law at China University of Political Science and Law, thought the property tax has limited effect to curb property prices.

"The property tax as tax on wealth plays a great role in local government's fiscal revenue, rather than the property market. Meanwhile, the reason for the housing price rise in China is complicated. Demand for houses remains strong and local governments won't change its fiscal reliance on land grant fees, which constitute a high proportion of housing prices. To curb housing prices, land policy, such as more housing supply and financial policy, would be more effective."