Research On Tax Reform Under The Neutral Fiscal Policy

At present, China is being placed in the economy to turn the track path, tax reform is an indispensable and important part among the whole economic system reform. Tax reform in China is similar as economic system reform, has already walked through the process of more than 20 years. The tax system has grown compound and scientific tax system from only a few taxes under the nonstandard tax system. However, Chinese tax system still exists some defects and inept factors to economic development in China. So how to set up the frame of tax system in terms with the conditions of China, which is an important topics which people investigate continuously. The proactive fiscal policy in place for six years has b(?)come unfit for current macro situations. As the deflationary macroeconomic environment gradually turns inflationary, it is imperative to change the proactive fiscal policy to a neutral one by a progressive course. In the long run, the ideal condition of fiscal policy is neutral, the proactive fiscal policy shouldn't become the long-term choice. On May 27 in 2004, the minister Jin Renqing of Ministry of Finance celebrated that our policy would fade out the proactive policy and adopt the neutral policy at"Support The Poor Conference In The World"that held up in Shanghai. Though economic circles have different standpoints about the concrete connotations of neutral fiscal policy. In a long period of aftertime, the whole public finance system reform including tax reform, should contrive the new thoughts on tax reform under the neutral fiscal policy.This paper researches some problems of tax reform under the neutral fiscal policy by using Institutional Theory and combining tax reform theories. The writer wishes that some breakthrough and innovation by standing on the predecessors. By analyzing current tax system and its problems and connecting current situations in China, puts forward some suggestions about tax reform in China.The whole paper is divided into five parts:The first part is introduction. Firstly, it is cultural heritage overview. Secondly, analyses the connotations of fiscal policy; aiming at the current issue about the concrete connotations of neutral fiscal policy, proposes that neutral fiscal policy is a basic balanced budget, has no excessive deficit and balance, by analyzing the connotations of neutral fiscal policy from foreign and domestic point of view. Fiscal policy should be dedicated to the turning adjustment on fiscal policy from a proactive one to a neutral one. This is a process. This paper also draws the connotations of tax reform and tax reform under the neutral fiscal policy. It points out how to start the new round of tax reform. The new round of tax reform should aim at main tasks of macroeconomic regulations, and fit in with the turning adjustment on fiscal policy to a neutral one, contrive the new thoughts of tax reform by uniting the overall targets of the new round of tax reform.The second part is the necessity of tax reform under the neutral fiscal policy. Firstly, analyses the base of tax reform theory under the neutral fiscal policy, proposes that the design of tax reform should gender "tax neutrality" as direction and be suit to combine with "tax regulation". By analyzing substantial evidence of foreign and domestic fiscal policy that put forward tax reform, proposes the necessity of tax reform under the neutral fiscal policy. Moreover,in this chapter, the writer partly uses time consistency theories that included in the real businesses cycle, carrying on the stability analysis to the neutral fiscal policy and tax policy, points out that tax system under the neutral fiscal policy has more built-in stability.The third part is the basic considerations to design the new round of tax reform under the neutral fiscal policy. Firstly, proposes the overall targets of the new round of tax reform, points out the basic principle,guaranteeing the sustained growth of fiscal revenue,efficiency initiative,look after both sides fair, appropriate centralization and appropriate distribution, etc..Secondly, put forward the basic considerations to design the new round of tax reform under the neutral fiscal policy. It points out that new tax system reform should not adopt the choice of increasable tax policy,make a structral adjustment on current tax system with increase in some parts and reduction in other parts; according to the request of the neutral fiscal policy, define the current tax system to extend or tighten scientifically; adapting the transformation of the fiscal policy, appropriately extrude the direction of tax neutrality; the tax reform exert the effect of pave road surface to take the bridge" for perfecting the market economy system, start the relevant reform at the same time. In the end, the writer proposes the concrete path choice of tax reform under the neutral fiscal policy. By regulating the norm of adjustment of tax system, to boost the construction of Chinese tax system with the sunlight process, to promote the equity and the efficiency of the whole tax system,to make use of the super revenue which accept the budget income and the assistant revenue with increase in some parts of tax, pay the cost of tax reform.The fourth part is implementation steps of the tax reform under the neutral fiscal policy. This chapter is main chapter of the full text.The writer makes use of a great deal of length to discuss how to reform the tax under the neutral fiscal policy. First, carrying out value added tax(VAT) reform which changing the tax type from creative to consumptive is one of main content of tax reform under the neutral fical policy.Second,definitude reform of consumption tax system which it is gratified to the upgrade of the national economy consumptive structure,ajust objects and rate of consumption tax. Third, the path neutralization of refom of enterprise income tax,including the refom of its system, incorporating its system about inside and foreign enterprise, establishing corporation tax system; the individual income tax play a important role in macroeconomic regulations which has the auto-stable function to economic fluctuation, build up integration and classification individual income tax system gradually and progressively. Finally, starting the reform of local tax system which including adjusting the structure of local tax is also a major content of tax reform under the neutral fiscal policy, related contents of local tax reform include: improving the real estate tax system, social security tax, establishing environment protection tax in season, starting reform of tax and fees gradually, and so on.The fifth part is the implementation strategies of tax reform under the neutral fiscal policy. In this chapter, the writer firstly analyses that progressive reform is the actual choice on the new round of tax reform under the neutral fiscal policy. Second, tax reform is a kind of institutional change, it needs a series of reciprocal institutional change which is a series of matched measures of tax reform, these will boost the new round of tax reform. The main contents of matched measures include: boosting economic system reform, boosting fiscal and financial system reform, boosting fiscal expenditure system innovation to improve the system of public finance, boosting construction of tax law system, setting up the tax administration in accordance with the principle of rights should be properly allocated, advancing the level of tax collection and administration capacity to ensure implementation of tax reform smoothly. In the last, the writer puts forward the criterion to judge the tax reform under the neutral fiscal policy, whether the tax reform succeed or not, be decided by the quality of tax system for design of reform (quality,Q) and the degree of acceptance to tax reform (acceptance, A).