Work

China’s Turn to Domestic-Led Growth: Replacing Consumption Taxes with Land Taxes?

Year: 2025

Type: article

Abstract: As part of its turn towards domestic-led growth China plans to stimulate consumption, including through a reduction in consumption taxes. We compare two model-based scenarios in which the revenue losses from lower consumption taxes are replaced by higher income taxes or higher land taxes. The model is carefully calibrated to recent Chinese data, including detailed fiscal data. We find that higher income taxes lead to significant losses in output and incomes, while higher land taxes lead to significant gains. These gains are increasing in the share of land in net wealth, a statistic for which better data would be invaluable.

Source: Syracuse University Libraries (Syracuse University)

Authors: Hou, Yilin, Kumhof, Michael, Shao, Lei

Institutions: Syracuse University, Central University of Finance and Economics

Language: English

Topic: Fiscal Policy and Economic Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W7112732542

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