Effect On Economic Increase Of Lational Tax Burden

The tax burden is the core of a country’s tax system, the research on the relationship between tax burden and economic growth is one part of tax efficiency research. Along the course of theoretical study to empirical analysis then to policy proposals, we analyzed the relationship between China’s tax and revenue from1994, the tax-share reform happened in this year, from multiple levels and perspectives. Also we measured four major caliber tax burden of China and studied the relation between China’s three major caliber tax burden and economic growth with empirical analysis. Also we do the Empirical analysis of relationships between the structure of the tax burden and the economic growth, between the tax burden and private investment as well as foreign investment in China, between the tax burden and consumption growth in China’s urban and rural residents. At last we culminated some relevant policy recommendations.Ⅰ. Scope of Study in the thesis1. The thesis is based on the impacts of tax burden on the economic growth since the tax system reform. So first the author reviews the compositions of the current tax system in China and then comments it.2. The author analyzed the composition of China’s government revenues and measured the size of the government revenue of China since1994. The government revenue of China can be divided into budgetary revenue, extra-budgetary revenue and extra-system revenue. We can know the budgetary and extra-budgetary income from the China Statistical Yearbook, but the system of revenue can only be estimated and we proposed the estimation method.3. The changes of the tax revenue were studied from number and structure dimensions. We analyzed the absolute and relative amount change of China’s tax revenue and investigated the changes in the allocation between central and local government of tax revenue, and the changes of the tax revenues of all kinds of taxes. From the perspective of the structure, we studied the main constituent ratio accounting for the entire tax revenue as well as two main taxes. Also we studied China’s direct and indirect tax and their change processes and examined China’s tax revenue in different industry and regional.4. The author estimated China’s macro tax burden with multi-statistical perspective and make international comparisons, and draw the interval boundaries of the optimal tax burden in China. We not only estimated China’s macro tax burden from the three calibers, but also measured it from the OCED and the IMF perspective. We also comprised China’s macro tax burden of the smallest diameter including social security charges and non-social security charges with some developed countries and developing countries. The author also used Musgrave classic model to determine the optimal range of macro tax burden in our country, and evaluated the macro tax burden with the objective and just criteria.5. Studied the relation between China’s tax revenue and economic growth with multilevel and illustrated the reason why the tax revenue growth over GDP growth for14consecutive years). The author described the relevance between tax growth and GDP growth from static angle and carried out statistical measurement with coefficient of elasticity of tax revenue from the dynamic angle.6. The empirical research of the impact of China’s tax burden on economic growth. With the help of the model and Eviews6.0software, we did some regression analysis between the tax burden and GDP growth from three statistical calibers. We also analyzed the tax on three main elements-capital, labor, consumer analysis and their impact on the per capita GDP growth with the regression model. We did empirical analysis to the impact of the tax structure on economic growth in China and our model includes four independent variables and the per capita GDP growth the dependent variable. We also found some evidence about the different industry tax burdens having different impact on economic growth. Based on those findings, the author researched three regional tax burdens’ impact on economic growth.Ⅱ. Main Conclusion in the thesis1. The conduction path of the tax burden’s impact on economic growth is the basis of our study. This conduction path is based on the growth of three endogenous factors for the sustained economic growth. These four elements are technology, capital,labor force and consuming. The social division of labor improves the efficiency of the three elements and provides the conditions to promote the final path to achieve the role of the tax burden caused by the tax system and tax policy changes in the economy. So we should improve the efficiency of the four elements, and ultimately achieve sustained economic growth. The tax burden is one kind of exogenous variables of economic growth as the institutional factor, it affects the economic growth through two aspects. The changes of specific taxes and tax structure result in the changes of the tax burden, and this change may lead to the change of transaction price of the four elements, thereby, change the economic effects of the elements, leading to a number of economic growth and structural change. This respect can be seen as a direct effect of the tax burden on economic growth, and our paper focuses on this role of the mechanism. In China the four elements affect the economic growth differently. China has abundant labor force, while the level of science and technology is relatively backward, so these two elements give small contributions to economic growth. So we focuses the impact of the tax burden on investment and consumption growth and further analysis on the path tax burden impacting the investment, consumption. We analysis the tax impact on investment tax from the point of view of the civil and foreign government, while analyzing the tax impact on consumption through the income tax, turnover tax and property tax in the process of residents’income.2. Estimates of the scale of China’s government revenue are the premise of this study. To estimate the scale of government revenue, we uses the following formula:Government revenue=budgetary revenue+extra-budgetary revenue+social security payments+land-transferring feesThe non-tax revenue scale in government revenue is estimated as:Non-tax revenue=government revenues-the tax revenueTo Compare China’s government revenue with other countries’ we concluded that with the countries of similar income levels, the proportion of the non-tax revenue of our government is too high and the scale is too big, phoning to the phenomenon of the fee squeezing tax.3. China’s tax revenue keeps growth by the rate of nearly20%since the implementation of the Tax-sharing system. But it is difficult to continue to implement the high-growth and add to the burden on taxpayers in the future. Structurally Says in China, two big main taxes show turnover tax occupy the absolute dominant position, especially value added tax to have a tax autocracy. It is helpful for tax efficiency improving about proportional distribution, but it cannot be achieved the tax adjust the function of the gap between rich and poor. Therefore we could think the structure of main tax is not reasonable, it is easy to produce distortions on economic.4. Since the implementation of the Tax-sharing system, the minimum diameter in the tax burden in china is not high and maintains a level at about15%, so it is basic equivalent to the small diameter tax burden, but the large diameter tax burden already reaches to the upper limit of the developed countries. The optimal interval of the minimum diameter in the tax burden in china is13%-25%, and the average interval tax level is about19%. The optimal level in theory interval of the large diameter tax burden is21.39%-41.91%, and the average interval tax levels is about30%.5. The effects of China’s three major caliber tax burdens on economic growth showed a positive correlation still.The medium-caliber plays a positive role in promoting the current tax burden on economic growth, while the big-caliber and small-caliber play negative correlation between tax burden and economic growth, which shows the tax burden in China has restrained the economic growth.6. Tax burden affects the three investment entities differently:it affects government investment weakly while affecting negatively either private investment or foreign investment in a significant way. But the tax burden impact on foreign investment changes from strong to weak with the multinational companies’investment strategy. The urban and rural residents’ tax burden includes the direct tax burden and a variety of implicit tax, but the tax burden between them has much difference. So our current tax structure is the urban-rural dual tax structure. From the empirical analysis of the impact of tax burden on consumption of urban and rural residents, the impact of the tax burden on consumption of urban residents showed a significant negative correlation, presented significant positive impact on rural residents.7. In terms of tax revenue structure, the tax burden of specific tax exerts different effect on the economic growth, in which the most notably is the turnover tax of the land and income tax. The increase of the share of turnover tax to raise the pre capital GDP growth rate; income tax increase of the share may reduce capita GDP growth rate. Revenue growth of China’s three major regions also varies obviously with the feature that the east and west regions are high and the middle regions are low and it is quite imbalance. In the middle and western regions, the tax burden has a significant impact of restraining on economic growth, and it is even severer for the western region compared with middle region. But there is little such effects in the eastern region.Ⅲ. Policy Proposals in the thesisChina’s tax burden optimization policy recommendations:1. Promote China’s urban-rural dual tax system transition to a unified tax system. Because a unified tax system for urban and rural residents is not only an important way to narrow the gap between urban and rural areas, but also the key to expanding domestic demand, including:(1) reforming the rural residents’indirect tax and tax revenue to realize zero burden of value-added tax.(2) establishing unified income tax system of residents in both urban and rural areas.(3) implementing the favorable tax policies for the rural residents with reducing or canceling the some kinds of taxes after the previous step.2. Reform and improve the current business tax is the basis of the tax burden optimization, specifically including:(1) improving the existing taxes;(2) introducing new taxes adapting to the new economic situation;(3) rationalizing the tax structure.3. Implementing structural tax cuts is the key to achieve tax optimization in the post-crisis era. Specifically our structural tax reduction program includes:(1) continuing to cut tax of more categories;(2) reducing or increasing taxes;(3) increasing the categories of tax.4. Change "fee" to "tax" reform and reduced fee while expand the tax burden, regulate the government’s revenue.Ⅳ. Innovation in the thesis1. From the point of view of economics, we analysis the conduction variables, conduction path, conduction medium of the tax burden affecting economic growth, and extended theoretical research in this regard. From the point of investment entities, the author also analyzed the impacting mechanism of tax burden on government investment, private investment and foreign investment. From the point of the residents’income, we systematically analyzed the mechanism of turnover tax, income tax and property taxes impacting on household consumption, and concluded that the income effect and substitution effect of turnover tax on household consumption are both very weak.2. On the basis of other scholars’ work, we further researches on the measurement and calculation of urban and rural residents’ tax burden and introduce a new empirical model to estimate per capita tax burden’s impact on per capita consumption expenditure of urban and rural residents respectively.3. Based on the research method of Around and combined with the data from the condition of tax-sharing system reform, we did empirical research to gain the order of tax growth which promote economic growth:personal income tax, resource tax, turnover tax, corporate income tax and property tax.