A Study On Personal Income Tax Affecting Structure Of Resident Consumption Expenditure

Concerning huge changes of China’s household consumption expenditure structure,this paper studies the influence of the individual income tax on the household consumption expenditure structure.The theory of income redistribution o,the theory of marginal propensity to consume,the Engel’s law,and the permanent income hypothesis are adopted as analytical tools.Analysis results show that there is a close connection between China’s individual income tax and household consumption expenditure structure.Adjustment of the individual income tax bearing will cause changes of the household consumption expenditure structure.A fixed effect variable-intercept model is built to demonstrate a significant negative correlation among the current individual income tax,the prior individual income tax and the household Engel’s coefficient.Besides,the influence of individual tax income on the household Engel’s coefficient varies regionally in that the fixed effects on developed provinces are more obviously underdeveloped provinces.Therefore,from the perspective of optimizing the individual income tax system,the author suggests that the dominant role of China’s individual come tax should be improved,and the tax bearing of low-and medium-income households be reduced.Besides,a flexible individual income tax system based on regional economic development differences and price level fluctuations should be set up to give full play to the role of the individual tax income in improving the household consumption expenditure structure.