China's Real Estate Tax Reform: The Intersection of Economic and Social Issues
Real estate tax is a focal topic of societal concern in China, and the Chinese government has repeatedly emphasized the need for a real estate tax. Yet, after two decades of intense debate, China's real estate tax reform has not commenced. Society imposes certain expectations on the effect of real estate tax reform: Raising fiscal revenue, regulating high property prices, regulating property distribution, and promoting local governance. However, each expectation is controversial, which makes societal consensus on real estate tax reform difficult to achieve. This study argues that taxes, such as the real estate tax, where taxpayers bear the pain of tax burden and harbor high expectations for public services, must consider the overall societal psyche. Fiscal sociology, rather than pure economic theory, should be applied to consider real estate tax reform proposals, with tax obligations based on the acceptance of the majority. Taking into account social consensus and the level of tax collection and administration, this study proposes a progressive two-step reform plan for China's real estate tax reform: In the short- to medium-term, a Central tax design with selective taxation at a progressive tax rate for regulation purposes; in the long term, a local tax design with universal taxation at a proportional tax rate to promote local governance and raise revenue.
Lyu Bingyang
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