The Level Of China’s Macro Tax Burden And Its Correlation With Economic Growth

Since the reform and opening up, China has experienced sustained and rapid economic growth, with its GDP increasing from364.5billion yuan in1978to47.2882trillion yuan in2010. Such stunning economic growth lays the material foundation for the growth of government tax. Statistics show that the tax revenue for the same period increased from51.9billion to8.9738trillion yuan. China’s tax revenue growth rate greatly exceeds its GDP growth rate, which has drawn broad public attention to China’s macro tax burden level. Therefore, what exactly is the level of China’s macro tax burden? Is it limited within a reasonable range? How does it correlate with economic growth? And how does China’s situation compared with other countries? Such questions have always been hot spots of academic research in recent years. The purpose of this paper is to discuss and analyze these issues and put forward some suggestions.To this end, the research methodology of this thesis combines theoretical analysis and empirical analysis, elaborating on China’s macro tax burden from both vertical and horizontal dimensions. On this basis, we try to analyze the intrinsic correlation between China’s macro tax burden and economic growth. Specifically, the.paper starts from an overview of the existing researches both home and abroad, with an emphasis on the academic achievements of Classical economics, Keynesians economics and Supply-side economics. Then, we measure China’s macro tax burden with three different calibers so as to estimate the reasonable range, and then compare it with the conditions of other major countries. Afterwards, we employ econometric methods to analyze the correlation between the China’s economic growth and its macro tax burden. Finally, in order to solve the problems in the existing tax and economic systems, we propose some appropriate policy recommendations.The research results of this study show that China’s macro tax burden has grown rapidly in the past decades, but is controlled within the reasonable range. Compared with the developed countries, the small-caliber and medium-caliber levels of macro tax burden are relatively low, but the large-caliber macro tax burden has already reached a high level, which must be properly controlled. Excessive growth of the tax burden has a negative effect on economic development. Despite that such negative impact is still minor, it shall serve as a cause for alarm. The existence of mass non-tax revenue is the main cause for the wide gap between the small/medium calibers and the large caliber, which seriously affects the economic order and the government’s macro-control ability. This is an urgent problem that needs to be solved timely.In response to the above-mentioned problems, this paper argues that we should take actions as follows:first, promote market-oriented reforms and further define government functions; second, ensure that taxation constitutes the major share of government revenues, and coordinate its relationship with the non-tax revenue; third, optimize the tax structure and make tax play a more active role in macro-control; last but not least, improve tax management and the efficiency of tax collection. By doing so, we can better solve the difficulties and problems in the tax system, and further limit the level of macro tax burden to a reasonable range, so as to promote the coordinated development between tax and economic growth.