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Property Tax in China: Is It Effective in Curbing Housing Price?

Author

Listed:
  • Huanhuan Zheng

    (University of York United Kingdom and The Chinese University of Hong Kong)

  • Qingyong Zhang

    (School of Agricultural Economics and Rural Development, Renmin University of China)

Abstract

This paper studies the effects of the property tax, implemented in Shanghai and Chongqing since January 28, 2011, on the housing price. Applying the synthetic control method of Abadie, Diamond, and Hainmueller (2010), we construct counterfactual housing price for Shanghai and Chongqing using monthly data from 33 cities that have no property tax. Comparing the counterfactual and actual price, we estimate that by November 2012 the average housing price in Shanghai was about 2127 RMB/m2 or 13.4% lower than it would have been in the absence of the property tax. This evidence is found to be significant using placebo test. We find no significant evidence that property tax is effective in curbing the housing price in Chongqing.

Suggested Citation

  • Huanhuan Zheng & Qingyong Zhang, 2013. "Property Tax in China: Is It Effective in Curbing Housing Price?," Economics Bulletin, AccessEcon, vol. 33(4), pages 2465-2474.
    • Handle: RePEc:ebl:ecbull:eb-13-00421
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I4-P232.pdf
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    References listed on IDEAS

    as
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    2. Jinjarak, Yothin & Noy, Ilan & Zheng, Huanhuan, 2013. "Capital controls in Brazil – Stemming a tide with a signal?," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2938-2952.
    3. George R. Zodrow, 2019. "The Property Tax as a Capital Tax: A Room with Three Views," World Scientific Book Chapters, in: George R Zodrow (ed.), TAXATION IN THEORY AND PRACTICE Selected Essays of George R. Zodrow, chapter 15, pages 461-487, World Scientific Publishing Co. Pte. Ltd..
    4. Eduardo Cavallo & Sebastian Galiani & Ilan Noy & Juan Pantano, 2013. "Catastrophic Natural Disasters and Economic Growth," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1549-1561, December.
    5. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    6. Crowe, Christopher & Dell’Ariccia, Giovanni & Igan, Deniz & Rabanal, Pau, 2013. "How to deal with real estate booms: Lessons from country experiences," Journal of Financial Stability, Elsevier, vol. 9(3), pages 300-319.
    7. Zodrow, George R., 2001. "The Property Tax as a Capital Tax: A Room with Three Views," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 139-56, March.
    8. Michael Keen & Alexander Klemm & Victoria Perry, 2010. "Tax and the Crisis," Fiscal Studies, Institute for Fiscal Studies, vol. 31(1), pages 43-79, March.
    9. Herbert A. Simon, 1943. "The Incidence of a Tax on Urban Real Property," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 57(3), pages 398-420.
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    Cited by:

    1. Chen-Yin Lee & Pao-Huan Chen & Yen-Kuang Lin, 2021. "An Exploratory Study of the Association between Housing Price Trends and Antidepressant Use in Taiwan: A 10-Year Population-Based Study," IJERPH, MDPI, vol. 18(9), pages 1-17, April.
    2. Lyu, Xueying, 2024. "Revisiting property tax capitalization," Regional Science and Urban Economics, Elsevier, vol. 108(C).

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    More about this item

    Keywords

    property tax; housing price; synthetic control; real estate market boom;
    All these keywords.

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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