Tax Structure And Residents' Consumption: Theory And Practice

Slowing economic growth is inevitable at this stage,which is not only the inevitable stage of China's economic transformation,but also the negative effect caused by the poor external environment.On the one hand,the growth rate of China's imports and exports has been decreasing since 2010,and with the increasing trade friction between China and the United States,the role of trade in promoting the economy has not been as good as before.It is difficult to achieve a high level of investment in the past.So far,the only remaining consumption in the troika has fallen sharply since 2000,and in recent years it has shown signs of rising but still far below the world average.Restoring consumption to stimulate economic growth in the case of blocked investment and trade may be the best choice to achieve healthy and sustainable economic development in the future.If we want to expand domestic demand,then ultimately,we have to go back to solving the problem of disposable income and consumption capacity of residents.To increase the residents' disposable income,one is to increase the residents' labor or capital income,and the other is to reduce the residents' tax burden.The former is mainly considered from the perspective of endogenous growth,which is closely related to the current supply-side structural reform.The latter is mainly considered from the angle of the government's financial means,and more accurately it is the means of taxation.Residents' tax burden includes income tax burden and consumption tax burden.They refer to the taxation of residents' income and consumption behavior respectively.If only from a certain tax point of view,tax will reduce the level of individual consumption,but not if viewed from the overall level of society,such as personal income tax on the one hand to reduce the level of personal income is not conducive to consumption,but on the other hand,it can also narrow the social gap between the rich and the poor through its progressive,improve the low-income groups.The marginal propensity to consume promotes the consumption of residents as a whole.Such a single tax,let alone the impact of different combinations of different taxes on Residents' consumption.From this we can see that the tax burden of residents is closely related to the structure of tax system.As trade and investment have been hindered,consumption has become the primary factor driving China's economic growth.To promote consumption,reducing the tax burden of residents in the existing economic environment has become an important issue.To solve the problem of tax burden of residents,we must start with the adjustment of tax structure.Therefore,in order to solve the problem of China's slow economic growth at this stage,the key lies in how to adjust the tax structure.Although logically,this reasoning is established,does the actual theory support it? How does the tax structure affect the consumption of residents?This paper first describes the internal relationship between tax structure and consumption through two theoretical models.On the basis of Banchard's(1985)infinite-bound overlapping generation model,an optimal model including tax structure is constructed,and the overall impact of tax structure on consumption is analyzed.On the other hand,we analyze the influence mechanism of tax structure on the price of commodities(or services)through the tax homing model.Secondly,this paper analyzes the relationship between tax structure and residents' consumption from a general perspective.Using the panel data of 89 countries(regions)from 1990 to 2015,this paper estimates the impact of income tax,turnover tax and property tax on household consumption.The empirical results show that income tax and property tax are conducive to household consumption,while turnover tax is not conducive to household consumption.In order to further reduce the endogeneity of the equation,we use econometric methods to strip out the consumption bias and reassess the impact of tax structure on consumption bias.The results also support the previous conclusions.Finally,the income effect and substitution effect of tax structure are further analyzed.The conclusion shows that income tax and property tax have greater income effect,while turnover tax has greater substitution effect.Thirdly,this paper also analyzes the relationship between tax structure and consumption spillover.In recent years,the problem of spillover has attracted more and more attention.Why do consumers prefer foreign products under the same product quality? Price is the most important reason.Because of the different tax structure between China and foreign countries,the indirect tax accounts for a higher proportion of the total tax revenue in China,and the indirect tax will be embedded in the price of commodities,thus raising the price of domestic commodities,resulting in the "contrast" or "upside down" between domestic and foreign commodity prices.In view of this,this paper uses panel data of 97 countries(regions)from 2006 to 2013 to make an empirical analysis.The results show that indirect tax promotes consumption spillovers.Furthermore,the results of the dynamic spatial Durbin model show that the consumption spillover is mainly affected by economic factors,while the spatial geographical factors are not obvious,but the mixed relationship between them is the most important.Then,this paper selects the rural tax and fee reform and "replace business tax with VAT" two events,and analyzes the impact of changes in disposable income and consumption tax burden on residents' consumption.The results show that the rural tax and fee reform event has promoted the rural residents' consumption rate to a certain extent,and this effect has a certain sustainability.Comparing the reform effect of the first stage with that of the second stage,it proves the effectiveness of reducing the direct tax burden on residents to promote consumption."Business-to-Business Increase" indirectly reduces the unit tax contained in commodities by reducing the burden of enterprise turnover tax,and ultimately reduces commodity prices to promote the growth of consumer spending.Finally,based on the conclusions of the above theoretical and empirical analysis,this paper combines the current situation of China's development,and puts forward the corresponding policy implications.