Reform Of Consumption Tax Under The Background Of “Transformation From Business Tax To VAT Reform”

Finance is an important part of national governance. The scientific of national finance and taxation system was depended on its ability to maintain unified market, optimize the allocation of resources and achievestability of the state. Since 1994, Chinese taxation system has continuously improved. and gradually formed the current taxation system. However, the current system cannot be perfect enough to meet the needs ofthe economic development of mode transformation, structure adjust and industrial upgrading. According to the rule of “Deepen fiscal and tax reform overall program”, the tax reform was focused on six taxes, including value added tax(VAT), consumption tax, environmental tax, resource tax, personal income tax, property tax.All the time, the consumption tax, as the supplement of VAT and the business tax, accepted the duty for the financial income organization, the consumer behavior adjust, the social equity promotion, the industrial structure optimization and the environment protection.With the process of transformation from business tax to VAT reform,the business tax as the main source oflocal tax revenue has been continually declining, which resulted in the loss of the local main tax. Therefore it is necessary to find a new idea to solve this problem by reforming and perfecting the local tax system.Based on the background of transformation from business tax to VAT reform, in this study, the feasibility of consumption tax as main tax was analyzed and the reform principle and direction of the current consumption tax reform was proposed. The corresponding measures on the existing problems and the reform orientation of the current consumption tax were putforward.. Through the analysis of the consumption tax and the local tax system reform combined with the required function to determine the direction of reform,it was suggested that the center of the local tax reform was the consumption tax reform and the reform should be focusedon the income effect promotion, considering of the effect of consumption tax. The issuing of the reform was proposed according to the reality in this study, which was useful for nations finance and taxation system promotion.