Empirical Study Of Real Estate Development And Local Tax Growth In Xiamen And Some Views On The Reform Of Local Tax System

William Petty said,"Land is the mother of wealth." In recent years, with the development of our socialist market economy, and accelerating urbanization, China’s real estate industry has enjoyed a quick development, real estate tax become a main force of local financial resources. Especially under the "tax sharing system" background, either the significant increase of real estate tax on the total amount, or the incremental to the strong pull of local taxes, have caused a lot of concern of the government and society. From the point of view of existing research, however, there has been little research about the precise measurement and quantitative analysis of the dependence of the local taxes (local finance) on the real estate industry.This paper will be based in Xiamen sample data, using quantitative analysis methods, studies the relationship between real estate investment and local tax revenues; analysis advantages and disadvantages both form the local government and real estate companies perspectives; finally give policy recommendations based on the local tax reform. That based on the empirical analysis in Xiamen, measurement of quantitative analysis, research of tax and real estate industries based on local tax reform, would have its practical significance.This study concluded that:(1) In recent years, with the rapid development of real estate market in Xiamen, the direct contribution and stimulating contribution of real estate to local tax increased significantly.(2) There is a stable long-term positive correlation between the real estate investments and local tax revenue growth in Xiamen:from long-term equilibrium, real estate investment increased by1%, will promote the growth of local tax revenues1.1432%; from short-term equilibrium, every1%of real estate investments change will lead to0.2126%local tax revenue change.(3) Highly dependence of local tax on the real estate industry has its advantages and disadvantages, to change the status fundamentally, local tax reform is one such necessary way.(4)Local tax reform policy proposals:optimization of the local tax system, established local body taxes, given local government appropriate local tax authority.