Research On Impact To Economic Growth In Gansu Province With The Replacing Business Tax With Value-added Tax

Replacing Business Tax with VAT(Value-added Tax) is carried out around our country on 1st August, 2013, include Gansu province. It is a significant reform, conformed to the law of tax system, and solves the problem of rupturing of tax chain in our country. Replacing Business Tax with VAT is an important part of deepening the reform of tax system. It will be completed at the end of 2015. At that time our country tax pattern will be changed. Turnover tax has the largest proportion in the tax revenues, VAT and Business Tax are the main categories of taxes in our country.This paper takes Gansu province as an example, research and analysis the impaction of Replacing Business Tax with VAT. Research is divided into effect on economic growth and the impact of industry structure. According to the results, we will summarize the results and problems, and put forward policy suggestions.This paper is divided into five chapters. The first chapter is introduction, including the selected topic background, research ideas and literature review, etc., both at home and abroad are briefly introduced in this paper, the research status, value and framework, and points out the innovations and shortcomings of this article. The second chapter is the tax revenue impact of the Replacing Business Tax with VAT in Gansu province, mainly divided into the impact on the tax revenue and the impact on the tax structure, this chapter using cast output table in 2007, Gansu province, under the levels(6%, 11% and 17%) rate, the change of before and after the reform of tax revenues are simulated, the study found that the tax rate on 11% is relatively reasonable. The third chapter is the economy growth impact of the Replacing Business Tax with VAT in Gansu province, firstly we make descriptive analysis on the influence of VAT and Business tax revenue and economic growth in Gansu province, using tax multiplier theory and empirical analysis to the Replacing Business Tax with VAT on economy growth in Gansu province. According to the residents’ propensity to consume in Gansu province, we work out that the tax multiplier is 3.9. According to the tax cuts through the Replacing Business Tax with VAT in Gansu province in 2014, GDP growth in 2.773 billion yuan and it increase GDP growth of 4.9%. The fourth chapter is the industry structure impact of the Replacing Business Tax with VAT in Gansu province, firstly we make descriptive analysis on the change of industrial structure in Gansu province, then using time series analysis method, empirical analysis on the VAT rate increase and the third industry in Gansu province showed a negative correlation. The ratio of value added tax increase would lead to the third industry decrease in Gansu province, the employment proportion will also be dropped. This reflects the special of Gansu province. Chapter five is the conclusion and policy suggestions, including the effectiveness and dilemma of Replacing Business Tax with VAT in Gansu province. The policy suggestions are put forward from the aspect of the central and local level, including that improve and simplify the tax system, training local taxes and reconstruct local tax system.