Evaluation on the Impact of Vehicle Purchase Tax on Automobile Market Under Difference in Differences

Under the impact of the epidemic and other factors, the downward pressure on China’s economy is great, the sales volume of automobiles is low, and a preferential tax policy of 60 billion vehicle purchase tax has been introduced. Will this policy boost the automobile market? The extent to which it can stimulate the car market needs further assessment. Based on the panel data of the national passenger car sales from 2013 to 2016, this paper constructs a Difference in Differences model to study the effect of tax incentives on the car market. The parallel trend test and the placebo test prove the effectiveness of the model. Through the heterogeneity analysis, the effect of tax policies at different levels of development is studied, and the policy effect of 60 billion vehicle purchase tax is predicted.