The Influence Of Industry Vat Rate Simplification On Local Government Fiscal Revenue

From value-added tax (VAT) transformation reform in 2009 to the reform to replace business tax with value-added tax in 2012, the VAT tax reform has been the focus of chinese tax reform. When tertiary industry is gradually brought into the scope of value-added tax instead of business tax, the value-added tax rate has increased two grades that means that previously it was 17% and 13%, and now it is 17%,13%,11% and 6%. But the problem is which scheme of value-added tax simplification can ensure stability of fical revenue and how the scheme influences local government revenue. Therefore this paper studies the effect of industrial value-added tax simplification on fiscal revenue, especially local government revenue.The paper uses the 2010 China input-output table as research data, the 31 Local regions as research objective, by means of input-output analysis and econometric model to study the effect of industrial value-added tax simplification on fiscal revenue. The results show that the value-added tax simplification scheme can guarantee the stability of national fiscal revenue when standard tax rate is 13%, low tax rate is 8% and levy rate is 3%. Under the simplification scheme, the total local government revenue will decrease 104.25 billion yuan which nearly equals to the business tax revenue in 2010. The difference between simulation value under the simplification and real value about local government revenue is positively influenced by local economic development, dependence on foreign trade, manufacturing industry value added, construction industry value added, the tertiary industry value added, and the value added by large-scale industry, but is negatively influenced by agricultural value added. Therefore the government can tranfer part of import VAT and domestic VAT to local government according to the local industrial and tertiary industry value added, and appropriately adjusts the resource tax, consumption tax or direct tax to increase fiscal revenue. Besides because of real estate as an important part of tertiary industry, collecting the real estate tax as local tax can bring local government new fiscal revenue whose tertiary industry is developed.