| During the past thirty years, with the reform and opening-up policy being carried out in China, remarkable achievements have been made in economic and social construction. The past thirty years is also a process in which our economic system gets adjusted and perfected.In 1994,China carried out the most extensive and influential reform in industry and commerce taxation. Since then, China's tax system has been stable ,and with the rapid development of its economy, China's tax revenue has also increased strikingly. What's more, since 1996, tax revenue has a higher increase rate than that of GDP. Based on economic principles and intuitive feelings, scholars in China have attached much attention to this phenomenon.So what causes to China's unusual revenue growth? Is this phenomenon reasonable? Does the current revenue growth break away from economic growth? What the high growth of tax revenue has exerted on economic growth? These questions have been the focus of scholars at home towards the above-mentioned phenomenon.Now, a new round of reform is carried out on fiscal taxation. Making certain of the above questions will advance the new-round fiscal taxation reform and establish a solid foundation for current taxation policy.Therefore, according to the characteristics and reasons of tax revenue growth as well as its influence on economic growth, this thesis makes researches on China's tax revenue growth since 1994.The research method undertaken not only follows the general rule of people's understanding of things, but also grasps the main theme that revenue serves to economy, in order to urge continuative economic growth and harmonious relationship of tax and economics.1. Tax Revenue and the Feature of its GrowthSince 1996,the link relative ratio of China's tax revenue growth has exceeded that of GDP. Tax revenue growth was above normal level from 1994 to 2007.During this period, the tax revenue growth outstripped its plan every year.From the perspective of items of tax, from 1994 to 2007 income tax was the main force of the revenue growth. From the perspective of industry, the tertiary industry tax growth exceeded that of primary and secondary industries. From the perspective of region, the revenue growth in eastern China is markedly higher than that in other economic belt. From the perspective of economic composition, the growth rate of revenue that came from mixed or shared economy was higher than that from economic sectors. Besides, it released that the central revenue growth was faster than that of the local from 1994 to 2007,which was also one of the basic goals of tax reform carried out in 1994.2 Revenue Decision and the Reason for its Growth Exceeding that of GDP2.1 Revenue DecisionThrough variance analysis, we find that the average revenue growth rate from 1994 to 2007 is obviously higher than that from 1985 to 1993. At the same time, through variance analysis, it is found that the revenue growth rate from 1985 to 1993 and the revenue growth rate from 1994 to 2007 have homogeneity of variance. The tax-sharing system results in the vast change of the average revenue growth rate, but doesn't affect the trend of revenue growth.From 1994 to 2007,GDP was the decisive factor of the level of China's tax revenue, but was not significant factor influencing tax revenue growth or the leading to tax revenue growth exceeding GDP. That is to say, from the perspective of tax revenue growth, GDP wasn't its main factor.Economic benefit is not only the decisive factors of tax revenue level, but also the significant factor influencing tax revenue growth and the leading to tax revenue growth exceeding GDP. As economic benefit is mostly related to income tax, income tax shows the most powerful growth force among all. Meanwhile, as the rise of economic benefit is inseparable from the joint-stock system reform, the revenue growth of mixed or shared economy ranks the highest, which illustrates the property right-oriented reform has achieved success. In addition, the index measuring economic benefit is chosen from industrial enterprises above designated size. This reveals revenue mainly comes from those enterprises.2.2 The Reasons for Revenue Growth Exceeding that of GDPThere are Incidental factors and durative factors which can account for this phenomenon. When the durative factors reached some level, they will keep driving the revenue to grow faster than GDP. However, only in constant change can occasional factors let the same thing happen .From 1994 to 2007,what lead to the revenue growth once exceeding GDP were these factors, say, a the rise of collection and management level resulting from the new collection mode "one principle, four systems" which aimed at attacking smuggle, the implementation of Golden Tax Project and refined scientific management: policy factors such as the normalization of non-taxable income and the expiration of preferential tax policy; the increase of economic benefit resulting from the reform of state-owned enterprises and vigorous private economy ; unbalanced inflation and so on. The reasons that bring about revenue growth exceeding GDP are: the current state of industry structure caused by the upgrading of industrial structure; surtax income brought by increase of enterprise revenue and residents' pay ; import business transactions develop faster than GDP.Among these factors, economic benefit change, the growth of tax collection and management level and the economic benefit level are the main ones that lead to tax revenue growth exceeding that of GDP. And these factors are one-off factors, which implies tax revenue growth exceeding that of GDP isn't stable or sustainable.3. Impact of Tax Revenue on Economic GrowthFrom 1994 to 2006, tax revenue and GDP data of our country have co-integration relation. It shows that the tax revenue increase has not broken away from the constraint of economic growth and system of tax-sharing reform in 1994 built up inherent stable connection between tax revenue and economic growth. But the data of tax revenue in 2007 has changed the data generating process of tax growth,and broken the co-integration relation between tax revenue and economic growth.Impact of tax revenue on the major factors of economic growth propeller (such as investment, labor , consumption , export and technology) and the complex impact of tax revenue in each city on economic growth all indicate that the negative effects tax revenue on economic growth have already appeared. According to Scully Model, the optimum macro tax incidence which boosts economic growth of our country is 18.98%. Combined with the result of Baluo Model, the reasonable level of tax in our country is about 20%.Proportional macro tax incidence has great influence in investment. Individual income tax has inhibitory action to investment. Moreover, the crowding out effect of government investment to private investment is quite obvious .Marginal macro tax incidence notably affects the labor force supply and net exports with a multiple of geometric growth in the form of quadratic curve. They have inverted U type relations. The marginal macro tax incidences which promote the rapidest growth of the number of employees in cities and towns and net exports are 19.58% and 12.39% respectively. Net macro tax incidence of imports and exports and net exports have notable negative correlation. Marginal macro tax incidence and the ultimate resident consumption growth rate assume the U type, shaping the upper parts of a U type and a J type observing from the opposite side. Individual income tax and the consumption of resident have notable negative correlation.The technology is effected by Marginal macroscopic macro tax incidence. Both of them assume the linearity relation and notable negative correlation. Marginal macroscopic macro tax incidence affect technology according to. fixed proportion.From 1994 to 2007, China's economic growth displays notable conditional convergence. As far as the whole country is concerned, tax revenue increase already has infirmly retarding effect to economic growth. But the effect o four economic belts differs. The tax revenue growth has driven the economic growth of eastern and central areas, and the effect is especially notable to the east; tax revenue increase inhibits the economic growth of northeast and western areas, and the inhibitory effect is especially notable to the west. Generally speaking, tax revenue has no significant effect to area economic gap.The tax revenue growth results in the increase of financial expenditure, which leads to economic growth. As far as the whole country is concerned, this effect is notable in theory, except in northeast and western parts of China. Besides, increase of the financial expenditure related to tax revenue has notable effect to area economic growth gap. As far as the whole country is concerned, the gap has been reduced between every province. Judging from each economic area, the gap in central area has been expanded ,while that of other areas is in pace with the whole country.4.Conclusion and Policy SuggestionThe financial crisis initiated by American subprime crisis has swept the globe. Under the influence of financial crisis, China's economic growth has slowed down. China has adopted a series of tax cuts to stimulate its economy. As a result, tax revenue of our country in 2008 decreased gradually. The high speed increasing state of the tax revenue lasting for more than ten years has ended. Moreover, in the end of 2008, it has sharply presented the negative growth . On the basis of the research results of this thesis and current financial situation, the author has put forward the following policy suggestions.4.1 The ConclusionFrom 1994 to 2007. the tax revenue increase (especially, increase faster than GDP) directly leads to the rise of macro tax incidence's level. Small-bore macro tax incidence in our country has reached its optimum level, but large-bore macro tax incidence (after considering land remise fund especially) has already exceeded its optimum level notably. From 1994 to 2007,the average rate of China's taxable GDP in overall GDP is about 67.17%. China's taxable GDP large-bore macro tax incidence already has reached an average of 36.24%. These data shows that tax base is relatively narrow.The big difference between nominal tax rate and the actual tax rate in our country calls for the improvement of tax. collection and administration level, and has ensures tax authorities to regulate and control invisible income flexibly. In this case, the tax authorities' enhancement on tax collection and administration is largely related to refund of surplus and budget management without exclusive of refund. Tax revenue in our country mainly comes from industrial enterprises above designated size.At present, although the tax revenue presents negative growth, 4 trillion financial expenditures should be added newly, thus China is confronted with the pressures of increasing tax revenue and tax cuts.Marginal macro tax incidence and the ultimate resident consumption growth rate assumes the U type, shaping the first part of U type at present. Technology and the marginal macro tax incidence have significant negative correlation. Net macro tax incidence of imports and exports and net exports show negative correlation. Individual income tax and the resident consume present significant negative correlation.Tt is discovered that it has positive correlation between macro tax incidence of industrial enterprises above designated size and entire society's investment growth rate, the possible cause may be that enterprise investment is unreasonable at present. The investment increase becomes the source of increase of the government tax revenue. Therefore, in order to gain a higher tax revenue ,the government invest more. Meanwhile , more investment requires that the government collects more taxes. The two factors jointly contribute to tax revenue's high growth and the positive correlation between enterprises' macro tax incidence and investment.The significant different effects of the tax revenue increase to economic increase can possibly result from the Matthew Effect that the current tax system has played in regional economic development.4.2 Policy SuggestionWe should keep the macro tax burden about 20%.In the current reform of tax system , attention should be given to expand tax base and lower tax incidence. Build the tax system with income tax and turnover tax as the core. At present, in the process of tax system reform, nominal tax rate should be reduced to narrow the distance between the nominal tax incidence and the actual tax incidence, but the former should still be a little higher than the latter. It is required to further improve tax-sharing system, cut down shared tax between central government and the local and strive to resolve " double faithful " problem of the tax authorities(mainly central tax organ ); Strictly forbid various forms of refunded revenues, in order to promote the tax management in accordance with the law. Industrial enterprises above designated size ought to be the key subjects of tax revenue monitoring.Non-tax revenue administration should be enhanced, and bring non-tax revenue into range of state finance management. Transforming administrative fees into taxes is the focal and difficult point in the reform of the fiscal system hereafter. Should strengthen budget administration and bring all government funds into budget.What's more, attention should be paid to guarantee and develop the tax revenue sources, and help relieve the contradiction between revenue and expenditure. The current increasingly serious contradictions in fiscal revenue and expenditure call for that stamp duty in dealing in securities should be retained .Reducing marginal macro tax incidence will drive consumption to a multiple growth, and improve total factor productivity and employment situation and economic growth. Individual income tax should be reduced to stimulate resident consumption level and expand domestic demand. China has taken some Countermeasures such as raising tax rebates on some goods to lower the net tax incidence in export, stimulate net export and prevent economic growth from decreasing. It is essential to put policies into practice to guard against tax fraud, evasion.To implement fiscal performance actively and strengthen the state-owned enterprises' performance appraisal, build scientific, strict and open operating mechanism ,distribute financial funds efficiently, preserve and increase the value of state assets and prevent unreasonable investment.In the western and northeast part of China, efforts should be made to improve the investment environment to attract enterprises to set up their general headquarters there. To carry out tax refund policy and reduce the refund percentage from 30% to 15%; to improve central government's vertical and horizontal transfer payment capacity, thus to attain the balanced development of these areas.
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