China will actively push forward property tax and personal income tax reforms as it continues to overhaul its fiscal system, a senior official said on March 7.

The drafting of a reasonable and appropriate national taxation system on property ownership is in full swing, said Shi Yaobin, vice-minister of finance, at a news conference during the first session of the 13th National People’s Congress.

After drafting the necessary rules, the government will fully empower the local governments and introduce the tax step by step, Shi said.

“Like most of the countries that have already implemented a property tax, the tax in China will be based on the estimated value of the property and will have appropriate tax reductions for low-income families,” he said.

The local taxation authorities will be in charge of the property tax and use the proceeds to improve local development such as infrastructure, education and healthcare, Shi said.

The Government Work Report delivered by Premier Li Keqiang on March 5 at the ongoing first session of the 13th National People’s Congress called for “prudent advances in the legislation on property tax”.

NPC spokesman Zhang Yesui said during a news conference on March 3 that the country’s policymakers aim to submit a draft of the property tax law to the NPC Standing Committee for review at an early date.

Experts expect the legislation, under discussion for several years, to be an essential part of the structural reform to improve the country’s tax system, and some of them predict that this could mean introduction in parts of the country at the end of 2019 or during 2020.

“Progress on the long-awaited property tax fits with the apparent intent to reform the inter-governmental fiscal system and better matches the expenditure responsibilities of local governments with their revenue base,” said Louis Kuijs, head of the Asia Economics Department at Oxford Economics, a British think tank.

Another tax reform measure in the works is the higher personal income tax threshold, which was confirmed by Shi at the news conference. The current threshold is set at 3,500 yuan ($553).

“We will also introduce policies for tax deductible items in the commercial pension insurance scheme,” said Shi. This will be a supplementary measure of the personal income tax reform.

He also said China will for the first time include children’s education and medical care for critical illness in the items that are eligible for tax deduction in the personal income tax category.