Economic Effects Of Property Tax And Optimization Suggestions For Its Reform

In recent years, with the overheated real estate industry development, house price remains high, which becomes unbearable to ordinary people. Government policies are trying to regulate house price, but the effect is generally unsatisfactory. And the present adjustment of China’s economy is in a crucial period of transition, the heavy financial burden on local governments makes them overly depend on unsustainable land finance, and therefore we need to find a sustainable, stable and safe, efficient source of local revenue. In the context of current overcapacity, a steady source of fiscal revenue can only rely on tax revenues generated by the real estate industry. However, the current property tax system of China is formed in the planned economy, which do not match today’s real estate market development and the market size. Considering the property tax system of China itself is also problematic, it is imperative to reform the property tax.In this context, Shanghai and Chongqing started a pilot of personal residential property taxes in2011, which takes a substantive step in the reform of the property tax. What’s the effect of the pilot? What are the economic effects of property tax? How to establish the functional orientation of property tax in China? And how to break through the obstacles to further deepen the reform of the property tax? These questions are analyzed in the article.First, the article combs and introduces the concepts and theoretical basis of the property tax, to provide theoretical support for related discussion. Second, analyzes the need for property tax reform, mainly from the unreasonable situation of China’s property tax system, problems in the local finance, and needs of the real estate market regulation. Third, focuses on the economic effect of the property tax. By combining theoretical analysis and empirical analysis method demonstrate price and revenue effects of the property tax. Conclude that at this stage, the features of the property tax should be positioned to guide and regulate the housing consumption, but in the long run, it can be developed into the main tax for local governments to provide a continuous, stable, and safe, efficient source of revenue. On the basis of clearing the property tax function, followed analyzes the effect of property tax pilot, as well as some of the issues, and noted obstacles and difficulties of further deepening reform by taking Shanghai as an example in this article. Finally, considering the problems and difficulties of the above factors, this article put forward suggestions on deepening the reform of the property tax.