The Study On The Adjustment Of Financial Relationship Between Central Government And Local Government Under The Expansion Of The Levy Of VAT

Value-added tax as one of the main taxes in China, with the steady growth ofrevenue protection, revenue, and enhance the important role of the nationalmacro-control ability. Since the2009VAT reform, the VAT system is maturing, thepolicy of positive effects become increasingly apparent, VAT and business tax tax andlevy the tax system design, making the consumer value-added tax advantage ofdiscounted, the two taxes and levy the other negative effects brought about to promotevalue-added tax to expand the collection of range reform on the agenda. VAT toexpand the scope of the collection, means even less of the sales tax on taxableindustry is completely abolished, while the central government to consider how thebasic premise to ensure that local vested interests to obtain the support of localgovernment, which is the reform of VAT expanding circumference key can proceedsmoothly.This article rely on the theory of optimal taxation system, the theory of publicfinance and fiscal decentralization theory, illustrates the need for this stagevalue-added tax to expand the scope of the collection by the coexistence of theanalysis of the causes and negative effects of the VAT and sales tax of China’s localgovernments to share VAT consumption tax ratio declining dependence on decliningtwo basic facts to clarify the importance of the adjustment of the central and localfiscal relations in the reform. From the game point of view and system design showsthe rate design to expand the scope of the collection reforms will face tax ownershipand sharing of the ratio, the tax rate is designed to adhere to the principle of the taxburden pan, VAT is still as a shared tax sharing ratio has to be consideration of localvested interests, drawing on the practice of other typical country in the VAT system todeal with the relationship between central and local governments. Finally, consideringthe local financial capacity on the basis of a clear financial resources and powers tomatch the principles of step-by-step expansion of the circumference, while payingattention to solve the reconstruction of the local tax system. Reasonable adjustmentsto the sharing ratio and increase the balance of transfer payments, and to promote theconstruction of basic public service equalization.