The Study On Tax Policy Of Stimulating Consumption Demand Of The Middle And Low-income People

With the development of economy and the advancement of society,the research on consuming has been becoming a special field.Consumption demand is basis,irreplaceable demand.The growth speed about the economy of one country,to a large extent,depends on consumption demand.At the same time,the western econimics believes that marginal propensity to consume decreases by degrees,but generally speaking,the middle and low-income people have higher marginal propensity to consume.Therefore,expanding consumption demand,especially the consumption demand of the middle and low-income people,is crucial to economic growth.In recent years,the saving rate has been increasing and consumption rate has been decreasing.The lack of consumption demand has become the encumbrance to keep on the growth of economy in our country. The Outline of the Eleventh Five-Year Plan suggests that expanding the domestic demand lies in the expanding of the consumption demand. In March,2007,Premier Wen Jia Bao makes it clear that"adjusting the relationship between investment and consumption ,concentrating on expanding consumption demand","especially expanding the consumption demand in rural area".At the same time,the new reform of tax system has been starting.The tax policy inevitably adjust itself to adapt the tendency of economical development.Jin Ren Qing,the Minister the Ministry of Finance,emphasizes that stimulating consumption demand is the priority of fiscal policy in the Outline of the Eleventh Five-Year Plan.The topic of this paper is to study the tax policy which stimulates the consumption demand on the viewpoint of the the middle and low-income people.The paper analyses the unfavourable factors in current tax policy,then puts forward some suggestions,and,embodys the influence of consumption demand to promote the development of the economy. Under such background,the topic of this paper chooses has the very strong practical significance. The paper is divided into four chapters,the specific surname as following:â… .Main contents and viewpointChapter one:Introduction.This part is theory core and basis of the paper.The first section is to introduce the theory of consumption,including current western consumption theory and Max's consumption theory.The second section is to analyse the impact of tax to consumer's behavior.Chapter two:This part describes current situation of the insufficiency of consumption demand and analyses the cause.The first section introduces six current situations about consumption demand.It includes:Investment demand is quicker than consumption demand;The resident's marginal propensity to consume has been declining;Consumption rate is low,compared with the saving rate;Fundamental individual consumption is cutting down,while the consumption of develops and enjoys is increasing;The level of consumption is different between cities and countrysides as well as the ultimate consuming rate is low.The second section analyses seven causes of the insufficiency of consumption demand.It includes:Tradition consumption concept has held back resident's propensity to consume;The uncertainty of the resident's income;The gap in wealth reduces the effective demand;The rural area residents show more than willing but lacking the power to the field of consumption;The obstacles of system is another important cause;Subemployment has been restricting consumption;People know little about consuming credit.The third section describes the damage of insufficient in consumption demand.Chapter three:This part describes unfavourable factors in tax policy about stimulating propensity to consume of the middle and low-income people.The first section shows the problems about the low-income people.In one hand,it explains the problems about supporting the peasant(refer to the low-revenue peasant, immigrant worker,lost-land peasant)of current tax policy,mainly differentiates the categories of tax and analyses,such as value added tax,business income tax,business tax,individual income tax,vehicle purchase tax and car and ship use tax.In the other hand,it explains the problems about supporting laid-off workers of current tax policy,differentiates the categories of tax and analyses,such as value added tax,business income tax and supporting measures. The second section shows the problems about the middle-income people,also mainly differentiates the categories of tax and analyses,such as individual income tax,consumption tax,social security tax and so on.Chapter four:This part puts forward some suggestions about increasing consumption demand of the middle and low-income people. This part is more important than the other parts.The first section,the author analyzes financial policies in developed countries about supporting middle and low-income people,and gives our administrators some advice.It is introduced from five aspects:High disbursement and high allowance to support agriculture;Standard agriculture tax system and preference to the agriculture;Creating more jobs by applying tax policy;Individual income tax plays an important role to adjust distribution ;Social security has ascertaining finance source.The second section,the paper suggests adjusting tax policy on consumption demand of the low-income people.Firstly , the author puts forward some suggestions to support the consumption of the peasant. Suggestions on value added tax:maintaining agricultural means of production in tax allowance policy,supporting tax policy about industrial management of agriculture,pushing forward value added tax system reform on agricultural product,regarding tax allowance about producing and selling some necessaries,embodying the influence of VAT on improving the rural area consumption environment;Suggestions on business income tax and business tax:perfecting tax policy in supporting agricultural enterprise and service management , regarding tax allowance to immigrant worker(including lost-land peasant)engaged in the non-agricultural undertakings.Suggestions on individual income tax:canceling interest income tax and so on.Suggestions on vehicle purchase tax and car and ship use tax:giving the peasant tax allowance.Secondly,perfecting the tax policy of supporting the reemployment of laid-off workers.Suggestion on value added tax:regarding tax allowance;Suggestion on business income tax:relaxing standards of the small enterprises of enjoying tax allowance. Relevant supporting measures:expanding tax allowance policy.The third section is about adjusting tax policy on consumption demand of the middle-income people.Suggestions on individual income tax:perfecting the standards of cost deduct,designing collecting point nimbly,perfecting the levying pattern and adjusting the tax rate,canceling interest tax;Suggestions on consumption tax:adjusting levying range and so on;Suggestion on social security tax:collecting social security tax as soon as possible to increase the resident's anticipate;Others:considering tax allowance about hot spot of consumption.â…¡.Major contribution:Firstly,the paper buckles new circumstances tightly and tracks the hot spot of economy.The paper attaches importance to the combination of the environment and fiscal policy.Under the environment of building up the harmonious socialist society,the paper takes the Outline of the Eleventh Five-Year Plan and new tax system reform as a turning point.Combining with tax policy , the paper systematically analyses the insufficient in consumption demand about the middle and low-income people.Secondly,the paper cleans up the study train of thought and subdivides categories of tax.The study train of thought in chapter three and chapter four is very important.The author subdivides categories of tax.This kind of thought not only makes the frame clear,but also can analyse systematically.