How does Property Tax Reform Affect Citizen-Government Relations in China?

PIs: Lily L. Tsai (Department of Political Science, MIT)
       Xiaobo Lü (University of Texas, Austin)

Abstract

Property tax is one of the most critical factors in real estate development and sustainable urbanization around the world, yet we have little understanding on the political and economic consequences of property tax in developing countries, especially in China. In recent years the Chinese government has made various indications that it plans to introduce property taxes in the near future. In anticipation, both policymakers and scholars have engaged in heated debates as collecting property tax is uncharted territory in contemporary China since 1949. Our project sheds light on these debates by using innovative survey and lab experiments in the field to understand the attitudes and behavior of ordinary citizens in response to the potential implementation of property tax, thus providing much needed micro-foundations to illuminate the implications of various tax collection schemes. More importantly, we take an interdisciplinary approach by incorporating existing theories in political science, economics, and psychology to understand the behavioral consequences of property tax among Chinese citizens. We aim to contribute to our understanding of the relationship between fiscal capacity and state- society relations, which is key to sustainable real estate development. We believe this project will generate a wide-range of scholarly and policy implications to other developing countries facing rapid urbanization.