The spatial distribution of real estate taxes impacts on housing price in China

The purpose of this paper is to present some empirical findings on the spatial distribution of real estate taxes impacts on housing price in China. The fixed effect regression model was used to estimate this effect with Data of the 31 provinces and metropolis in 1998-2006. The finding showed that:1 real estate taxes had both direct and indirect impact on housing price. The direct effect was real estate taxes capitalization, and the indirect effects were referred as the capitalization of public services deriving from the real estate taxes revenues. 2 Real estate taxes had a negative effect on housing price in China. If the collected real estate taxes increased at 1 percentage, housing price would increase at 0.038 percentage, but if local public expenditure increased at 1 percentage, housing price would increase at 0.398 percentages. 3 The real estate taxes burden effect on housing price in central districts of China was much more obvious than Western China, and this effect in Eastern China was not obvious. The reason for the results could be explained to some extent as the spatial difference of local public expenditure.