A Research About The Influence Of Replacing Business Tax With Value-added Tax On Xi'an Local Finance

The reform of the tax system in 1994 ensured the growth of central government revenue and enhanced the macro-control ability of the central government.However,due to historical reasons,business tax and value-added tax have been levied in China for many years,which affect the realization of tax neutrality greatly.The change of business tax to value-added tax has become an important part of China's fiscal and taxation system reform.According to the State Council's deployment,the reform program to replace the business tax with a value-added tax has been piloted in the Shanghai transportation industry and some modern service industries,since January 1,2012,which has opened the curtain of this major tax reform.From August 1,2013,Xi'an City first launched pilot reforms in the transportation industry(excluding railway transportation)and seven modern service industries.The railway transportation industry and the postal industry were included in the pilot on January 1,2014.The telecommunication industry was included in the pilot on June1,2014.From May 1,2016,the construction industry,real estate industry,financial industry,and life service industry have all been included in the pilot scope.At this point,the business tax has withdrawn from the historical stage,and the value-added tax has achieved full coverage of goods and services.This paper mainly discusses the impact on the local finance of Xi'an after the tax reform and the problems that need to be solved.This paper takes reform as the timeline,based on the tax burden calculation formula,and measures the impact on industry tax burden and local fiscal revenue.At the same time,the paper also uses the calculation to study whether the reform achieves structural tax reduction goal,and finds problems in operation.It also analyzes the relevant path of the impact of reform on local fiscal balance.First of all,this paper introduces the relevant theories of the impact of reform on local government finance,and on the basis of defining the concept of business tax and value-added tax,studies the impact of reform on tax reduction.According to the taxation principle of VAT,the tax negative calculation formula is obtained.Secondly,by selecting the scope of the industry and related data,some assumptions of policy change in simulation analysis are put forward.On this basis,the tax negative calculation formula is used to estimate the impact of reform on Xi'an local tax revenue in the short term.At the same time,this paper selects fiscal data from 2011 to 2017 to analyze the impact of reform on the local fiscal balance of Xi'an.Finally,based on the above simulation analysis,it is concluded that with the implementation of the reform,affected by the decline of the industry tax burden and the characteristics of industrial structure,the local fiscal revenue of Xi'an has obviously decreased in the past few years,which in turn has affected the local financial balance.According to China's national conditions and the policy direction indicated by the 19 th National Congress of the Communist Party of China,this paper puts forward more comprehensive policy recommendations on future VAT reform and local expenditure budget management.