The Effect Of Replacing Business Tax With Value-added Tax On The Local Fiscal Revenue

On May 1,2016,the main local tax 'business tax' was replaced by the value-added tax completely.This reform is conductive to reduce heavy taxes and double taxation in services and provides a broader space for development of service industry.But with value-added tax expansion,the local tax system lost the main tax,which had a huge effect on the local fiscal revenue.This paper studied the effect of replacing business tax with value-added tax on the local fiscal revenue by theoretical and empirical analysis.On the basis of combing the existing research results,this paper analyzed the main problems that exist in the current local tax system.Then based on the 'replace business tax with value-added tax' event,this paper analyzed the effect on the local fiscal revenue from theoretical and statistical analysis.The study found that the reform resulted in the local tax system losing the main tax and greater local fiscal pressure.Moreover,this paper calculated the effect of all-round reform on the local fiscal revenue based on 2012 input-output table of China.Calculation results showed that the all-round reform reduced the local fiscal revenue of 2012 by 7232.83 billion yuan,resulting in local tax revenue falling by 15.29%,local fiscal revenue falling by 11.84%.All-round reform had a remarkable effect on the local fiscal revenue.Even if the local government enjoys 50%of the value-added tax,which cannot solve the effect on the local fiscal revenue.Finally,this paper gave policy suggestions to perfect the local tax system from the perspective of short-term and long-term.In the short term,we can perfect the local tax system by the following ways:improve the local sharing ratio of value-added tax to 60%,clear fiscal power and responsibilities of the local government,perfect tax return and transfer payment system.In the long term,we should speed up cultivating the local main tax.Estate tax as the stable and beneficial local tax,it is potential to become the local main tax.We should speed up the expansion of estate tax reform process.This paper studied the effect of replacing business tax with value-added tax on the local fiscal revenue from the perspective of comprehensive reform.Then this paper gave the policy suggestions to perfect the local tax system specifically.The research contents are more comprehensive and objective.On the other hand,the research data is innovative.Study the effect of replacing business tax with value-added tax on local fiscal revenue based on the latest tax rate and interim provisions,no longer to study based on the system hypothesis.The conclusions of this paper are more realistic.