Research On Effects Of Property Tax On Resident’s Consumption

In the last decade, the problems of high housing prices and the structural imbalances in the real estate market have been under fierce discussions in the society. These issues also received the government’s attention. Thus, the government a serials of policies to adjust and control the real estate market’s development. The property tax now is one of the methods to control the market, and plays an important role in the reform of taxation. In January 2011, Shanghai and Chongqing became the first two cities that taxed individual housing. It has been five years since the property tax was carried out, and it’s significant to assess the effects of the policy. Through the assessment, we can provide some suggests to make more reasonable tax system, which will contribute to the reform and promotion of the property tax.The policy is usually aimed to improving people’s life and welfare, so this article studies the effects of the property tax on resident’s consumption in Chongqing, analyzes whether this policy can ease resident’s saving pressure due to high housing prices and improve people’s welfare.This article mainly divides into five parts, and make a detail elaboration on the current situation of Chongqing property tax, the theoretical mechanism of the effect of the property tax on resident’s consumption and the empirical research of the property tax’s effects on resident’s consumption. Finally, this article come to the conclusion and also put forward some proposal.First, this article compares Chongqing’s tax to Shanghai’s and the national property tax, and studies the current situation from two aspects:local fiscal revenue and the real estate industry. Second, this article analyzes the direct effects and the indirect effects on resident’s consumption and studies the theoretical mechanism of the property tax’s effects on resident’s consumption. Third, the empirical research uses the System Control Method to evaluates the influence of Chongqing property tax on resident’s consumption. At last, this article makes a conclusion of the research and put forward some suggestions according to the study above.This article’s conclusion is as below:Chongqing’s property tax is aimed to the luxury houses, and doesn’t tax ordinary houses. This differentiation of the scope of taxation has an impact on the structure of housing market, thus some buyers who have been meant to buy luxury houses eventually buy ordinary houses. When the demand of luxury houses declines and the demand of ordinary houses increases, the price of ordinary houses increases along with it. In Chongqing, the price’s rise just increases a part of resident’s wealth. To most of people, it means the more cost of housing, and they have to reduce their expense on daily life so that they can afford to the housing expense. So considering the whole resident’s consumption, Chongqing property tax have a negative influence on the people’s consumption.