Research On Variation Of General Tax Level

General tax level refers to the proportion of social resources a state occupied via taxation, and it is presented as the ratio of tax revenue to GDP in the corresponding period. In market economy, general tax level indicates the proportion a government has possessed in the total social resources and the role played in the whole economy. Fiscal policy is determined by economic conditions while simultaneously impacts on the economy; as a major form of fiscal revenue, tax provide a important foundation for government spending, while at the same time, general tax level also is confined by economic development and its influence on economic development. If general tax level is unreasonably high, leading to the over-occupation of social resources by the government, capital accumulation and entrepreneur spirits would be negatively impacted, hence economic development impeded; however, if general tax level is too low, government would not be well-functioned, resulting in ill-economic development as well. Therefore, a reasonable general tax level is of critical significance for a healthy and steady growth economy.Many factors impact a country’s general tax level and its growth, including level of economic development, standard of production technology, price and income allocation system and so on, with economic development and production technology as the major factors. Since production technology is embedded in the economic development, the latter is the most important factor in general tax level determination. A state’s reasonable general tax level in a certain period must be in accordance with its economic development. In various economic development phases, general tax level presents different traits, which include both the numerical value of the general tax level and the velocity of the growth rate. Studying the growing trend of general tax level and the laws of its development in various economic development phases, can provide a viable standard for general tax level evaluation, and a scientific basis for the reasonable general tax level and its growth rate determination under certain economic conditions.Since the reform of tax-sharing system in1994, China’s tax revenue has witnessed a fast and steady growth, with annual growing rate over15%from1997to2010, with some particular year exceeding20%and even up to30%, which is far higher than the economic growth rate of the same period. The fast increasing of tax revenue is the constantly rise of general tax level. This long-term and rapid increase of general tax level sufficiently meets the need of government expenditure; however, what factors caused this rapid rise and whether this current growth is reasonable, and if yes, how long this growth will maintain and its negative impact on national economic development are remain unknown. All these very issues determined the fiscal policy-making of China, and particularly it is the significance of this study lies in.Study on general tax level is for the following issues:what are the factors influencing general tax level, how (via what kind of functional mechanism), and what about the relations among these factors? What are the basis and standard for reasonable general tax level? Are there any laws or regularities in the development course of general tax level, if yes, what about the laws or regularities? Whether the current general tax level in China should be called reasonable, what about the reasonable level and the developing trend of it?Based on all those issues, the thesis is divided into six parts:Chaper1, introduction. In this opening chapter, the background and significance of the thesis, domestic and abroad related studies especially conclusions on influencing factors on and functional mechanism for general tax level, are introduced; main contents, research method and thesis structure are depicted, and major innovation, insufficiency and advise for further study are presented.Chaper2, determination of general tax level. Began with the definition of general tax level and its related terms, including general tax level, tax base and tax rate, the author probed into the influencing factors for general tax level, which are classified as determinant factors for ideal general tax level and influencing factors leading to the deviation of realistic general tax level from ideal ones. Ideal general tax level refers to the level in accordance with a country’s economic development, and it is measured with per capita income and is determined by the economic development, economic structure and other economic viable; major influencing factors for the deviation of realistic general tax level from its ideal one include the extent of government functions, government efficiencies, structure of government revenue and expenditure. The author analyzed the determining system in which the above influencing factors impacted the general tax level via its impact on tax base and rates, and built theoretical model based on this system. Chapter3, the existence and verification of S-style development law of general tax level. Start with the influence of economic development on general tax level, the author depicted the S-type development of general tax level, divided the whole process of this development as three phases, and made theoretical analysis on the general tax level and traits of variation in each of the phase. Based on the very analysis, the author tested the S-type of development via time series data of general tax level and economic indicators in developed countries up to time span of a hundred years and the panel data of general tax level and economic indicators of various income-level countries. The conclusion showed that, either for time series or for panel data, the development course of general tax level generally presented a kind of S-type developing track, with few particular exceptions owing to the deviation of real general tax levels from ideal ones resulted from the non-economic factors.Chapter4, determination of inflexion in the tract of S-style development of general tax level. Based on the foregoing discussion, the author determined the particular two inflexions which demarcated the whole development course of general tax level into three phases via three different ways. The very first way is adopted as time series data analysis, which is derived from the data of central governments in developed countries and contains almost the whole three phases of general tax level development. By non-parameter method, this particular way shows directly the non-linear relations between data of general tax level and per capita income in the process of inflexion-determination. The second method adopted income-grouping standard used by World Bank, and its conclusion showed that, form the cross-data and the growth trait of general tax levels in countries of various income levels, the general tax level in those countries are in strict confirmation with the development features in three phases as discussed in the foregoing chapter. The third way reached exactly to the trait of per capital income at the point of second inflexion via logistic growth function fitting with time series data of17OECD countries from1965-2007. Based on the three methods, the author compared the location of inflexions in each method, and found they were in good congruence; therefore, to study the eigenvalue of the horizontal inflexion, the author set up the indicator system with per capita income as the major indicator and industry structure, urban population ratio as reference indicator.Chapter5, features of general tax level in its various developing phases. Based on the demarcation of various developing phases of general tax level, the author made a positive study on the velocity of various developing phases via state space model together with panel data model, probed into government revenue-and-expenditure structure of various phases, and made a systematic analysis based on evidence from United States.Chapter6, structure of tax income and government revenue and expenditure. Based on the general law of development on both of the structure of tax income and structure of government revenue and expenditure, the author characterized tax income and expenditure in countries of various income levels, depicted the changes of tax-income and government-expenditure structure with economic development, and finally analyzed the exact process of this change.Chapter7, general tax level of China. In this concluding chapter, the author reviewed all the tax system reforms since the establishment of PRC, and based on which the author took the market-economy stage as the time interval for the study on the general tax level of China since the Reform of tax-sharing system. After analyzed the variation of general tax level, various economic indexes, government income and expenditure of China, summarized the features of development of general tax level, and made a comparison of those features with conclusions made in the previous chapters, the author made a reasonable judgment on the current general tax level and the structure of revenue and expenditure, and forecasted the developing trend of general tax level in China.