Inheritance tax also has symbolic meaning in ensuring social equality and justice, Feng said.

In March, the China Institute for Income Distribution (CIID) at Beijing Normal University made public a separate report titled The Inheritance Tax System and Its Inspiration for Income Distribution in China, saying that the country already meets most of conditions necessary to impose inheritance tax.

In the report, the CIID listed positive effects that would be brought about by inheritance tax, including promoting social equity, spurring economic transformation and narrowing the income gap.

Given China's total tax revenue of more than 10 trillion yuan ($1.63 trillion) in 2012 and empirical data from other countries, inheritance tax could generate an estimated annual income of 200 billion yuan ($32.63 billion) for the government, the CIID report said.

As most people's inheritance comes in the form of real estate, imposing the tax could also help deflate the housing bubble and bring down housing prices, the report added.

Zhu Daqi, Deputy Executive Director of the Economic Law Research Center at the Beijing-based Renmin University of China, believes that inheritance tax should redistribute wealth. "Currently, a serious problem facing our society is the increasing polarization between the rich and poor," Zhu said.

Overcoming the obstacles

However, Liu Shangxi, Deputy Director of the Institute for Fiscal Science Research under the Ministry of Finance, pointed out that it would take at least three to four decades before inheritance tax could actually be levied in China.

China's 70-year limit on real estate leases will also complicate the issue, Liu said. In China, private property can be leased for only 70 years and although the leasehold can be automatically extended, the costs incurred in extending are not yet specified.

Liu also said that the tax is likely to meet opposition because it challenges traditional Chinese beliefs that parents should rely on their children to take care of them and leave their property, especially a house, to their offspring as inheritance.

One focus of the ongoing debate is the "unreasonable" tax rates and threshold proposed in the 2010 revised draft.

"The 800,000-yuan threshold can be easily reached now in China, especially in first- and second-tier cities where housing prices have been soaring," Liu said. A 100-square-meter house in Beijing could easily be worth 3 million yuan ($491,700), based on the average price measured in August by the China Index Academy.

In response, the CIID report suggested raising the tax threshold to 5 million yuan ($819,500), which some experts believe is still low when considering the current real estate market.

Fan Yong, Vice Dean of the School of Taxation at the Central University of Finance and Economics, is one such advocate of an adjustment. "There should be a precise and scientific study of China's special national conditions, such as the overall property status of the common public, to determine the threshold and methods for levying inheritance tax," he said.

Feng, with the Chinese Academy of Governance, also stressed that the tax should be paid by the very wealthy rather than common people. "A baseline for the levying of inheritance tax is that it won't hurt the middle class," she said, calling for further studies of such a threshold so as to avoid taxing the average household.

Difficulty in ensuring the fairness in implementation is what hinders the introduction of inheritance tax in China. Therefore, some supporting measures like a property registration and evaluation system should be established and perfected before the nation starts levying the tax, according to Feng.

"Meanwhile, the valuation system also gives cause for concern, since art collections and real estate fall within the scope of the proposed tax," said Wang Zhenyu, a researcher with China University of Political Science and Law, adding that families will be tempted to undervalue their assets and that this creates opportunities for corruption.

Wang Fang, a senior partner at Beijing-based Dacheng Law Offices, suggested that future schemes must take the vastly different levels of income in China into account. "Decisions must be based on the thorough and meticulous collection and analysis of data," he said.

Wang also noted that a national system for asset and property rights information for individual citizens should be established before the government starts collecting inheritance tax.

China has begun to piece together such a private asset and property information platform in recent years. In December 2011, the central bank required commercial banks to verify the identities of their depositors by the end of 2013.

"A full discussion is needed before inheritance tax can be implemented," said Shi, at the China University of Political Science and Law, adding that the move requires long-term consideration.

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