Research On Tax Policy To Boost Residents’ Consumption In China

For a long time,the driving force of China’s economic growth mainly comes from investment and export.This kind of economic growth driven by external demand can not adapt to the global tension caused by the current COVID-19.It is urgent to expand the consumer market to drive economic growth.In 2021,the fourth session of the 13th National People’s Congress voted and adopted the resolution of the 14th five year plan for national economic and social development of the People’s Republic of China and the outline of long-term objectives for 2035.The plan pointed out that during the 14th Five Year Plan period,we should deeply implement the strategy of expanding domestic demand and improve the contribution of consumption to economic growth.Consumption is the final link of social reproduction,an essential condition for restoring people’s labor force and labor force reproduction,and also the fundamental driving force for maintaining a good cycle of economy.Due to the influence of traditional and conservative consumption concepts and the restriction of limited disposable income,the overall level of residents’ consumption in China is not high.Boosting residents’ consumption is the key to maintaining sustainable economic development.A government usually uses tax tools to participate in the distribution of social resources.Tax can indirectly affect residents’ consumption by changing the prices of goods and services,or directly affect residents’ consumption by affecting residents’ consumption ability and consumption psychology.In recent years,China has continuously introduced tax reduction and fee reduction policies,such as reducing the tax rate of value-added tax,increasing the exemption of personal income tax,and issuing special additional deduction policies for personal income tax,It has effectively improved residents’ consumption ability and consumption desire.However,China’s tax policy still has deficiencies in boosting residents’ consumption,such as the high proportion of indirect tax,outdated consumption tax items and tax rates,imperfect personal income tax system,lack of social security tax and so on.In this context,it is of great significance to study the tax policy to boost residents’ consumption in China.By combing the existing relevant research of scholars at home and abroad,combined with western consumption theory,this thesis puts forward the theoretical basis and mechanism of tax affecting residents’ consumption,mainly studies the impact of value-added tax,consumption tax,personal income tax and social security on Residents’ consumption in China,and describes the actual situation of residents’ consumption,relevant tax policies and social security policies in China.Through empirical research,Find the tax problems that are not conducive to boosting China’s residents’ consumption,and put forward the corresponding countermeasures to boost China’s residents’ consumption.The main contents of this thesis are as follows: This thesis expounds the research background and significance of this thesis;It introduces absolute income consumption theory,relative income consumption theory and preventive savings theory;This thesis analyzes the theoretical basis and action mechanism of tax affecting residents’ consumption.The theoretical basis includes the income effect and substitution effect of tax.The action mechanism includes that tax affects residents’ consumption by adjusting residents’ income distribution,tax affects residents’ consumption by changing the price of goods and services,and tax promotes consumption upgrading by changing the supply structure of goods and services.It is found that there are some problems in China’s residents’ consumption,such as the growth rate of residents’ consumption is lower than that of GDP,the low consumption rate and the significant impact of "house slave effect" on Residents’ consumption;This thesis introduces China’s relevant tax policies and social security policies related to residents’ consumption.Establish vector auto-regressive model(VAR),select value-added tax,consumption tax,personal income tax and social security tax with social insurance fund income as alternative variables from 1994 to 2020,and analyze the impact direction and degree of each tax on Residents’ consumption.The results show that value-added tax can promote residents’ consumption in the short term,but the effect and degree of influence are not obvious,but it is inhibitory in the long-term equilibrium;Consumption tax can promote residents’ consumption,and the degree of influence is strong;Personal income tax has a significant inhibitory effect on Residents’ consumption in the short term;Social security tax can significantly promote residents’ consumption,but the degree of regulation is weak.Based on theoretical analysis and empirical analysis,combined with the current situation of residents’ consumption and relevant tax policies,this thesis puts forward some problems,such as the high proportion of indirect tax,restraining total social consumption,outdated consumption tax items and tax rates,which is not conducive to the upgrading of consumption structure,imperfect personal income tax,limiting consumption growth,lack of social security tax and reducing consumption tendency.According to the above problems,this thesis puts forward corresponding suggestions on the development of China’s tax policy in boosting residents’ consumption from four aspects: reducing the proportion of indirect tax,improving the tax items and tax rates of consumption tax,improving the personal income tax system and implementing social security tax.