The Impact Of Business Tax Was Changed To Value-Added Tax On Income Distribution Of Urban Residents

With the modern development of China’s governance capacity,the country’s tax revenue continues to increase,the country is becoming stronger and stronger,the people gradually achieve income growth and become rich,and their lives are increasingly rich.But at the same time,the corresponding problems also follow,and the income distribution gap of our residents is growing.Tax has always been regarded as an effective means of government macro-control,which can reasonably regulate income,further optimize the distribution of resources,promote social equity,and achieve sustainable and healthy development.In the past,the research on residents’ income distribution usually focused on the income tax,while the research on the impact of value-added tax on residents’ income distribution was relatively lacking.As the first important tax category in China,VAT has a wide range of impacts.Due to its regressive characteristics,it will have a certain impact on the income distribution of residents.Therefore,this paper chooses VAT to analyze the income distribution of urban residents.In the context of the reform of reducing taxes and fees in recent years,the government has continuously optimized and improved the value-added tax.Whether the continuous reform of value-added tax will worsen or improve the inequality of income distribution among residents is unknown.The replacement of business tax with value-added tax is one of the important reforms in the VAT reform.It changed the original business tax collection project into value-added tax collection,causing changes in tax rates in different industries.When the tax burden is completely forward,it is bound to affect the tax burden of residents,and thus affect the income distribution of residents.Therefore,this paper selects the reform of replacing business tax with value-added tax,which is of great significance in the VAT reform,to study the impact of replacing business tax with value-added tax on the income distribution of urban residents in China,which is of great significance for China to consider how to reduce the income distribution gap between urban residents as far as possible while maintaining the principle of neutrality when implementing the VAT reform.The research of this paper is mainly divided into four chapters: The first part is the introduction,which first introduces the significance and value of this topic,and then combs the relevant literature at home and abroad on the impact of value-added tax and the replacement of business tax with value-added tax on the income distribution of urban residents,and then introduces the corresponding research contents and methods of this paper.Finally,it points out the innovation and shortcomings of this paper that need to be improved.The second part is the theoretical analysis,which starts with Keynesian consumption theory and analyzes the progressive formation mechanism of VAT;Then,taking the replacement of business tax with value-added tax as the entry point of the VAT reform,the paper discusses the impact path of the replacement of business tax with value-added tax on the income distribution of residents from two aspects: the impact of the replacement of business tax with value-added tax on the increase(decrease)tax effect of the industry and the tax burden on residents’ consumption expenditure.The third part is an empirical analysis.First,build an input-output price model to determine the price change of the final products of each department caused by the replacement of business tax with value-added tax,and then calculate the change of the effective tax rate of products of each department before and after the replacement of business tax with value-added tax;Then multiply the consumption expenditure data of urban households by the effective tax rate of the corresponding departments(this paper assumes that the tax burden is completely carried forward,and consumers bear it completely),and get the tax burden of different income groups of urban households before and after the replacement of business tax with value-added tax.Finally,the Suit index is introduced first.By comparing the changes of the index before and after the reform,the cumulative changes of VAT before and after the reform can be obtained.The increase of the cumulative changes will widen the income distribution gap of residents,while the decrease of the cumulative changes will ease the income distribution gap of residents,so as to analyze the impact of the business tax reform on the income distribution of urban residents,Then,Gini coefficient and MT index are introduced to directly analyze the impact of replacing business tax with VAT on income distribution of urban residents.Finally,empirical results are obtained: first,the income distribution gap of urban residents in China is relatively large;second,the replacement of business tax with VAT will reduce the tax burden of urban residents;third,VAT will have a retrogressive effect on the income distribution of urban residents.Fourth,the replacement of business tax with VAT will aggravate the retrogression of VAT and worsen the income distribution of residents.The fourth part is policy recommendations.According to the results of empirical analysis,this paper puts forward corresponding suggestions on the distribution of residents’ income of VAT,aiming to reduce its retrogression and side effects on residents’ income distribution as far as possible under the general principle of maintaining the neutrality of VAT,which is of great significance for the deepening reform of China’s VAT.In addition,the study of the impact of VAT on urban residents’ income distribution from the perspective of replacing business tax with VAT is a further supplement to the tax theory.The analysis originally limited to the impact of direct taxes such as individual income tax on residents’ income distribution is expanded to the scope of the VAT tax system.Finally,the research prospect is carried out,hoping that other taxes can play a linkage role with VAT in income distribution.