Study On The Value-added Tax Reform Of Our Country From The Angle Of Tax Shifting

Tax shifting has been a"charming"problem since it was raised in the 17th century .This problem cause the interest of countless scholars in economic theoretical research and politicians running and stabilizing a country. Scholars hope that they can understand how tax shifting influence the supply and demand equilibrium, income distribution, rational distribution of resources, the whole social welfare change, enterprises tax planning. Government hope to make tax policies that can guarantee high economy efficiency. In 2007, China will fulfill the promise of entry into WTO and opening numerous trades. The promise will bring pressure to bear on"Byzantine type"tax system carried out by China at present. The author attempts to carry on research to the reform of the value-added tax in term of tax shifting, in order to promote the completion of the tax system of our country.Tax shifting theory has a long history of hundreds of years since it was proposed by the west economy scholar. Although it adapts the reality of the western society, it can not realize a complete"butt joint"if it is used to guide our county practice. So we must point out the defeat and deficiency in consulting foreign research. We have to explore the universal law of tax shifting agreeing with the reality of our country, with a positive analysis of China's reality.Tax shifting refers to the process in which tax payers transfer tax to others by various ways. The subject of tax shifting is a tax payer. The object is the legal burden of tax. Ways of tax shifting include forward shifting, backward shifting, mixture shifting and capitalization of tax with the price fluctuation. Finally, tax payer-in-legal and tax bearer are separated .Tax shifting is divided into three stages including tax rigidity impact period, adjustment period and stability period. Factors which influence tax shifting include tax system structure, goods elasticity, free pricing degree and technological constitution of goods, etc. The wider is tax range, the lower is tax rate, the heavier is tax collection and management right, the more likely will tax shifting happen. The elastic influence on tax shifting follows the opposite elastic rule, i.e. the more elastic is commodity, the more likely will tax shifting happen, the lighter is burden of tax, and vice verse. Free pricing degree effects tax shifting in the following way: the stronger is market monopoly, the higher is commodity price, the more likely will tax shifting happen. Within planned economy system, the price is fixed. But price will deviate from the equilibrium price. In this system there exists"stealthy"tax shifting. The amount of tax shifting and deviated degree are positively interrelated with each other. Because of the different technology constitutions of the goods, imposition of general tax and alternative tax leads to the different influence on tax shifting, and results in the difference of tax incidence. Tax shifting exerts a great influence on social economy. Because of price effect, tax shifting promotes the equilibrium of supply and demand. Because of the distribution effect, tax shifting promotes income reallocation, tax shifting also promotes rational resource distribution, improve economy efficiency and enterprises tax planning. These effects belong to the positive social effect of tax shifting. At the same time tax shifting weakens the leverage of tax revenue, damages consumers'interest, propels price rising. These effects belong to the passive social effect of the tax shifting.Since 1994, our country has implemented the double-body tax system. VAT and income tax are the main body of our tax system. The function of the VAT is very important in tax revenue of our country. We take VAT as the main thread with the horizontal comparative analysis of the main cataloging of our country under basic theories of tax shifting. The result is that VAT is apt to cause tax shifting. Tax incidengcer are not only consumer, but also supplier and seller.The amount of the tax burden relates to influence factors of tax shifting. VAT is divided into production type, income type and consumption type according to the scope of value-added part. According to the analysis of the law of tax shifting, we draw a conclusion that consumption VAT is one of the ideal tax categories because it makes minimum distortion to the economy. Tax shifting of seven main departments in our country is anglicized in quantitative by the statistics model. We have to consider the route of tax shifting, the way and influence factor of tax shifting, collect relevant data of VAT and trade volume between different department, calculate supply and demand elasticity of seven departments, and get the relevant datum of VAT shifting of seven departments. In these departments, the ones who have highest rate of shifting-out are production and supply departments of electric power, steam and hot water; those who have highest rate of shifting-in are the transportation and telecommunication industry. The heaviest named tax burden is on textile industry. The heaviest direct tax burden is on the farming industry. Farming industry and coal gas and department of processing industry of petroleum have excess burden of tax. This phenomenon reflects that the tax shifting of the productive type VAT of our country relates not only to elasticity but also to relevant intensity between the departments."Matthew effect"in the VAT seriously distorts our economy. On the whole, it is difficult for basic industry and new high-tech industry to shift out productive VAT, and shifting out of productive VAT increases the tax burden of these industries, hinder the development of relevant industries, the fair competition of internal and external goods of the international market, restrain expanding of investment, replacing of equipments and technological progress hamper adjustment and optimization of industrial structure.The government must carry on the design of"distortion tax revenue tool"because the productive VAT has distorted economy. In connection with the questions put forward by the VAT shifting model, several measures can be proposed to improve our country's VAT, following the optimum tax theory of the goods. First of all, in a situation when information is totally symmetrical, we can thin the rate of VAT according to Ramsay's opposite elastic tax rate rule, i.e. high tax rate in the low elastic department, low tax rate in the high elastic department. Second, in a situation when information is not totally symmetrical; we can add the output allowance but not tax favored treatment, using the"distortion tax revenue tool". By doing so, it also guarantees the integrality of the whole roller chain of tax revenue of VAT. Third, it is apt to cause reversible trades between departments because irreversible trades departments easily lead to tax shifting. Fourth, in order to solve the problem of high burden of tax in low elastic department, we must improve elasticity of departments. Fifth, we must realize the overall transition from the production type VAT to the consumption type VAT, improve the whole roller chain of tax revenue of VAT, and carry on the structural construction of tax system related to consumption type VAT, keep a lasting, healthy and harmonious economic development of our country.In a word, the author has tried to apply the theory of the western tax shifting to the practice of our country, and proposed the"stealthy"tax shifting in planned economy system. The VAT reform of our country is studied under the angle of tax shifting. At the same time, the author managed to improve the tax shifting model. Some pertinence suggestions and policies have been proposed on the basis of the model results.