Dilemma of Chinese Real Estate Tax Reform: Based on Evolutionary Game Method

Abstract

High housing price is a great agitation for contemporary Chinese people, therefore, many Chinese, especially Chinese youths, would like to see a more stable real estate industry. As a device for government to guarantee the real estate industry progress healthily, real estate tax has been being unfortunately difficult to expand thoroughly in China due to local governments’ financial problems. The research target of this paper focuses on Chinese central and local governments and real estate company faced with real estate tax reform. With evolutionary game model, the authors conclude that the major obstacle of the reform in China is land-transferring fees. The breakthrough points in problem of spreading real estate tax could be increasing its comprehensive benefits. The reform could only be done effectively after that the vertical governments work with each other voluntarily, so this paper suggests that the central government should give full assistance to local governments in formulating property tax plans and should promote the position of property tax as the main local income tax to make up for the financial defects after substituting business tax with value-added tax.