Analysis On The Effect Of Property Tax Reform In China

In recent years, with the development of the economy and society, the price of commodity houses has doubled and redoubled. The housing problem has been a focus. Our government has been taking measures to regulate the housing market. The approach using the tax as a tool for controlling the price of commodity houses grew out of the real estate tax which was presented in the Third Plenary Session of the16th Central Committee in2003, and by the widely and deeply research studies of the academics and the relative authorities of China, graded into reforming the property tax in existence to levy a tax on those non-business used houses that are under individual ownership. In2010, the National Development and Reform Commission posted Comments on the key tasks for deepening the reform of the economic structure in2010which said to advance the property tax reform, and then experimental reforms of property tax have been launched in Shanghai and Chongqing since2011. Gradually, the property tax reform has become increasingly attractive to all social circles.According to the summary of the important achievements of experts and scholars from home and abroad in the field of the property tax, this thesis analyzed the estate supply-demand contradiction and flaws in the current property tax with the conditions of the current domestic housing market, and indicated that the current property tax had not regulated the housing market effectively because of its limitations in whether timeliness or coverage. Also, the author expounded the necessity and immediacy of the property tax reform.The innovation of this thesis lies at its heart. Firstly, according to the economic theory, the author analyzed the effect of property tax on the housing market and divided the demand into three type:housing supporting demand to guarantee the basic needs, housing improving demand to live better and housing investing demand to make a profit. According to the analysis of the characteristics of the three types of the demand, the effect of the property tax to each type is clarified. Thought the tax would take little effect to the price of the commodity houses, it will make the different demand balanceable so the property tax would serve a useful purpose to the development of the housing market. Second, the author has selected the monthly data from1999to2010 and used the VEC model and impulse response function method to make the empirical research. The result is that the merely increasing of the housing demand would not break the balance in the housing market and neither the price nor the tax would be changed but both the supply and the demand would be reduced simultaneously In the short term, while the tax would not make effect constantly In the long term because the new balance of supply and demand would be formed. All conclusions above provided the theoretic proof and basic for the property tax reform.The author found that the system design and the policy formulation of the property tax would influence the effect of the tax. So in the three part of the thesis the author made contrast research to the current tax design, and teased out the questions during the reform. On the basis of research achievements from the related literatures, the designs of the pilot tax in Shanghai and Chongqing has been analyzed in the thesis to compare advantages and disadvantages of the two designs for future reference. Finally, the author described some questions which need some clarification in the research of the property tax reform, which contained the legality, placement of the reform and the position in the whole taxes system. As well as, the thesis proposed some policy recommendations that the support demand should be protected and the difficulties of taxation administration should be considered.