This paper examines China's urban housing sector and proposes that property tax reform be undertaken. Specifically, China should significantly reduce taxes on transactions and introduce property taxes during the possession of houses. This will increase housing affordability as a result of lower transaction costs, reduce speculation because of the higher opportunity cost of holding vacant houses, stabilize the fiscal system by generating more sustainable tax revenue, and improve the efficiency and fairness of the property tax system according to the principles of "ability-to-pay" and "user pays". Copyright (c) 2008 The Authors Journal compilation (c) 2008 Institute of World Economics and Politics, Chinese Academy of Social Sciences.
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Article provided by Institute of World Economics and Politics, Chinese Academy of Social Sciences in its journal China & World Economy.