The Choice Of Main Tax In Local Tax System After The Business Tax To Vat Transformation

With the launch of the comprehensively deepening reform leaded by the central government,the reform of the tax system such as the Change from Business Tax to Value-Added Tax has been carried forward gradually,resulting in the break of the local tax system established by the tax sharing reform in 1994.As the Business tax has withdrawn from the stage of history,marked by the pilot projects of the Change from Business Tax to Value-Added Tax being in full swing on May 1,2016,taxation issues such as the lack of main tax type of local tax system and the weakening of income-increasing ability are becoming increasingly prominent.Therefore,it is significant to determine the new main tax type that shall replace the Business tax as soon as possible,which means the start of the reconstruction the local tax system in China after the Change from Business Tax to Value-Added Tax.At the same time,due to the vast territory of China,the level of economic development between regions is uneven and natural resource capacity varies widely,Which means that in the re-selection of local main tax type,we should take full account of the unbalanced economic development levels of different regions,so that the government in undeveloped central and western region can get as enough financial revenue to full exercise administrative functions as their companions in the developed east region.On the basis of the theoretical analysis and practical experience,this paper puts forward relevant arguments according to the present situation of China's economic development,supported by the results obtained from the analysis and calculation of the actual economic data.Based on the theory of fiscal decentralization as well as the clear definition of the local tax and the main tax type of the local tax system,the paper analyzes the necessity of the existence of local tax,and summarizes the selection criteria of the main tax of the local tax system.Then,according to the characteristics of the main tax type of the local tax system,this paper analyzes the feasibility of several major taxes as the main tax type of the local tax system,and chooses the real estate tax and resource tax to carry out the targeted calculation.Finally,it is pointed out that the real estate tax and resource tax should be selected as the main tax type of the local tax system,on the basis of perfecting the taxation rights of the local government,clarifying the government affairs,simplifying the government levels and perfecting the taxation legal system.It's also emphasized that,during this new round of tax reform,the differences in regional economic development and natural resource endowment must be taken into account in the choice of local main tax types.Nevertheless,in order to achieve the goals of this new round of tax reform,from the perspective of promoting the optimization of economic structure and the transformation of industrial structure,we should consciously cultivate two or more tax types as the main local tax type,reducing the financial risks caused by the dominance of one specific tax type just like the business tax in the past.Last,but not the least,a series of reform measures shall be taken to improve the status of such selected tax types in the local tax system so as to provide stable and abundant financial income for the local government.