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Influence of the Purpose of Real Estate Tax Revenue on Residents' Willingness to Pay the Tax

【Authors】
LIU Hua, CHEN Lipeng & WEI Juan
【WorkUnit】
LIU Hua (Huazhong University of Science and Technology, 430074)CHEN Lipeng (Zhengzhou University, 450001)WEI Juan (Guangdong University of Technology, 510520)
【Abstract】

Residents' willingness to pay real estate tax has its bearings not only on people's tax compliance, but also on the effectiveness of real estate tax to be levied in the future. Therefore, this paper conducts through scenario simulation empirical analysis on the influence that the purpose of real estate tax revenue have on Chinese residents' willingness to pay the tax. The findings are as follows: (1) If the government defines the purpose of real estate tax revenue clearly, residents' willingness to pay the tax will significantly increase; (2) Different purposes of real estate tax revenue will lead to significant differences in residents' willingness to pay, and the willingness is the highest when the government uses the real estate tax revenue to improve public services such as education, healthcare, pollution control and transportation; (3) The willingness is the lowest when the real estate tax revenue is used for the construction of affordable housing. This shows that using real estate tax revenue to build affordable housing and public rental housing, which is the case in the ongoing pilot projects in Shanghai and Chongqing, dampens residents' willingness to pay the tax. Therefore, advancing towards fully rolling out the real estate tax reform and relevant legislation, the government needs to clarify how it will use the tax revenues, and use the revenues to improve public services such as education, healthcare, pollution control and transportation.

JEL:H21, H31, H41

【KeyWords】
Real Estate Tax, Purpose of Revenue, Taxpaying Willingness, Tax Reform