Tax policy and housing prices: evidence from Vietnam using event study approach

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This paper examines the effect of tax policy on housing prices in Vietnam for the period from October 2004 to September 2016 using event study approach. The authors find that all five key changes made to the personal income tax, corporate income tax and non-farm land use tax have caused the housing prices to decline on average 6-11% during the event window, but only the impact of the personal income tax changes is statistically significant. The fact that changes in housing prices are mostly seen prior to the effective date of the tax policy change implies that tax policy change indeed has influenced the housing prices in Vietnam. Although this research has not examined the mechanism through which tax policy has influenced the housing prices, the findings offer some implications for the government in terms of using tax policy for controlling housing prices in Vietnam. The research is also of very few papers in this literature that use the event study approach.

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    • Figure 1. Housing prices in Vietnam
    • Figure 2. Event and estimation window
    • Table 1. Effect of the introduction of personal income tax law on housing price
    • Table 2. Effect of the modification to personal income tax law on housing price
    • Table 3. Effect of the modification to personal income tax law on housing price
    • Table 4. Effect of the modification to corporate income tax law on housing price
    • Table 5. Effect of the introduction of the non-farm land use tax law on housing price