The Reform Approach Of The Tax System Which Emphasizes Building Taxes

After the tax sharing system reform in1994, local governments have been facingincreasingly more financial difficulties. Only by extra-budgetary or beyond-system income canthey fill the gaps. Furthermore, the deficiency of items of taxation caused instability andinconsistency for the local government receipts. Many developed countries regard property taxesas the major tax items of the local government receipts. However, currently in China, with thepresence of the regulations on the real estate product market, the idling of property tax and thepilot reform of property taxes, the reform of property taxes becomes a hot-debated controversialissue. Thus, research into how to levy property taxes, the reform approaches and the design ofthe tax system is of both theoretical and practical significance.The current dissertation firstly gave theoretical accounts to property taxes and tested thefeasibility of building taxes being major local tax items by combining the theoretical andempirical studies. Since the tax sharing system reform, the local government receipts are nolonger guaranteed; therefore, it is indispensable to build effective local tax system. The authorpresented preliminary ideas on the design of the tax system and pattern selection. Besides, thisdissertation conducted a case study based on the data of the local government receipts inGuangzhou over previous years. By analyzing the local government receipts before the reform,the components of the receipts and income effect, the dissertation exerted in-depth research intothe building taxes, which occupy the largest part of the property taxes. By estimating the value ofthe real estate in Guangzhou and considering the tax burden on rate payers, the dissertationpresented a reasonable tax rate of building taxes and estimated the local government receiptsfrom building taxes after the suggested reform. The author deems that regarding building taxesas the major sources of local receipts is relatively feasible under the tax system modeled in thecurrent dissertation.