Structural Tax Reduction: "Northeast Pilot Project" And Tax System Reform In China

Tax system reform is an important public economic policy that thegovernment macro-controls economy. Its movements influence every aspectof national economy.The Third Plenary Session of CPC Central Committee enacted Decisionof the CPC Central Committee on Issues Regarding the Improvement of theSocialist Market Economic System. It explicitly puts forward fundamentalprinciples and tasks of tax system reform in China. The pilot project firstbegan in old northeastern industrial basis on July 1st, 2004. Then, the scope oftax system reform will be enlarged to the whole country.There are four parts in this paper, elaborating tax reform measure ofstructural tax reduction.The first part makes a policy-based analysis of China's tax systemreform characteristic and core---structural tax reduction, elucidating thesignificance of carrying out structural tax reduction: first, it introduces thedefinition of structural tax reduction and tax reduction policy and theirdifference; second, it expounds that it is significant to carry out structural taxreduction for promoting our economic development, improving enterprises'competitive capacity and reducing ratio that tax reduction increment accountsfor GDP increment; finally, it elaborates that the new tax system reform ofstructural tax reduction covers a wide range and it goes further deep througha series of statistics.The second part put emphasis on theoretical analysis of structural taxreduction: first, according to tax system reform experience in our country andwestern countries, it is proved that carrying out tax reduction policy is animportant measure for developing domestic economy, increasing employmentand improving international competitive capacity. Second, according towestern tax reduction theories of supply-side economics (Robert Mundell'stax reduction proposition, Laffer Curve's theoretic significance andsupply-side economics'economic effects and optimal taxation theory of taxreduction), it elucidates the theoretical foundation of carrying out structuraltax reduction in China; third, it expounds whether it is necessary to carry outstructural tax reduction under current economic situations in our country. Thepaper deems that it is significant to carry out structural tax reduction for...