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An official with the State Administration of Taxation (SAT) said June 12 that due to overheated fixed assets investment, together with serious land resource abuses in some regions and industries, two-thirds of the nation's leased land remains idle.

The SAT official gave this comment as part of the policy explanation of the revised "Provisional Regulations of the People's Republic of China Governing Land Use Tax in Cities and Towns" released by the State Council last December.

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The land use tax is the only tariff imposed on purchased or leased land, but the current rate is too low. In 2006, the total amount of land use tax collected was 17.7 billion yuan (US$2.32 billion), less than 0.5 percent of the nation's tax income, which is why we need to adjust the tax regulations, according to SAT.

The revised land use tax regulations came into effect on January 1 this year. Adjustments have been made mainly in two categories: Land use tax in cities and towns, and foreign-invested enterprises.

According to the revised standard, land use tax now ranges from 1.5 yuan to 30 yuan per square meter for large cities, from 1.2 yuan to 24 yuan for medium-sized cities, from 0.9 yuan to 18 yuan for small cities, and from 0.6 yuan to 12 yuan for small towns and mining regions.

These rates are almost double the original rates. "So now the rising cost of using the land forces people to use it in a more economical and reasonable way," the SAT official noted.

And now for the first time, foreign-invested enterprises are subject to land use tax.

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