Research On Stimulating Residents’ Consumption By Structural Tax Cuts In China

The residents’ consumption in China has been at a low level for a long time. As oneof the troika to spur economic growth, the driving force that residents’ consumption takesabout is not as strong as it should be. In the recent years, the situation of internationaleconomic is more severe and the foreign demand is much weak than before. China’sexport growth has dropped largely. So, we must make some methods to stimulatedomestic demand especially the consumer demand in order to provide continuedmomentum for economic growth. For years, the residents’ consumption in China hasbeen at a low level.At the same time, China’s tax revenue has grew rapidly, macro taxburden remains high. Tax is an important tool for adjusting economic, it’ necessary for usto make a comprehensive study about the impact of the tax on economic. Then we canprovide a theoretical guidance for the implementation of economic policy in China.In this paper, we make a combination of theoretical and empirical research methods.By focusing on why we shall to carry out as well as how to carry out structural tax cutsstimulating consumption. We make a comprehensive analysis about the impact of thecurrent status of China’s tax on consumption. First, I make a review about the basictheory that the tax impact on consumer demand. Then I do the empirical analysis abouttax on the residents’ consumption. At present, the higher tax burden is not conducive toexpanding consumer demand. Excessive reliance on indirect tax is not conducive to theconsumption increase. And the income distribution function of the tax instruction is soweak that is not conducive to improve the level of consumption. At the same time, Imake a review about the measures of the structural tax cut. Then I make a evaluationabout influence of the measures to increase the consumption. The conclusion is that aseries of tax cuts takes a positive role on improving the residents’ consumption. Thecurrent structural tax cuts still have some places for improving. By make a analysis aboutthe differences about the effect of the tax cuts between china and America, the positiveeffect of the tax cuts to residents’ is significantly smaller than the United States ofAmerica. So, in order to improve consumer confidence, we shall gradually increase theproportion of direct taxes.Finally, I put forward some suggests for promoting consumption through structural tax reduction. Such as by reducing the rate of the commodity tax in order to reduce thetax burden, and by optimizing the individual income tax to adjust the income distribution.Increase the proportion of property tax and through the structural tax cuts increaseemployment, increasing the income of farmers. We can also improve consumerconfidence through levying social security tax.