Empirical Study On Tax Revenue Growth Exceeding GDP Growth

Since the tax reform in 1994, China has kept a rapid and sustainable growth in tax revenue, which provides a significant fiscal support for the development of economic construction and social development. China keeps its GDP growth rate around 10% annually meanwhile tax revenue growth rate around 15% to 25%. According to the basic principle that tax revenue growth determined by economic growth has a reaction to the economy, China's high speed tax revenue growth, which is an indisputable fact, is leaving room for doubt. Therefore, the relationship between tax revenue and GDP remains a disputable and hot topic in tax academic circles and tax authorities. Most studies on this subject are based on the data of the whole country. There are few studies presenting empirical analysis based on local data especially in respect of local tax revenue. This paper develops an empirical study on the relationship between local economic growth and local tax revenue based on the data derived from Beijing Local Taxation Bureau with the method of qualitative and quantitative analysis. This paper is intended as a contribution with some experience and evidence to the discussion.This paper includes five chapters besides introduction and conclusion. The introduction includes: a. raising the question; b. the significance of selecting the topic and the purpose of the study; c. the background and the method of the study; d. the structure of the paper, the key innovation and deficiency, etc. Chapter 1 presents a theoretical analysis on the relationship between tax revenue and economic growth including three aspects: the concept, the composition and the accounting method of GDP; comprehension of tax system and local tax revenue; basic knowledge of the relationship between tax revenue and GDP. Chapter 2 develops a relative analysis on tax revenue growth and GDP growth in China. Through describing the situation that tax revenue growth exceeds GDP growth, this chapter presents several reasons behind the fact concerning economy, policy and tax collection and management as well as an index analysis on relevance between tax revenue and economy. This chapter presented from a theoretical point of view finds out the reasons why tax revenue growth exceeds GDP growth in order to provide a theoretical framework for further empirical analysis on local tax revenue in Beijing. Chapter 3 presents an illustration of current development of economy in Beijing and the situation of tax revenue growth, which starts from the analysis on the local tax revenue in Beijing and the current development of economy in terms of tax burden and elasticity. Chapter 4 provides an empirical analysis on local tax revenue growth in Beijing exceeding GDP growth in terms of the relationship between tax revenue and GDP, and the relationship between revenue and economy gross index respectively. In order to quantify the relationship between the indices, the author applies a regression analysis on tax revenue and GDP, tax revenue and GDP growth rate, tax macro-incidence and GDP growth rate, and draws a conclusion at length. Chapter 5 puts forward the thoughts of promoting a balanced and sustainable development of tax revenue and economy in three aspects. Firstly, by clarifying the concept of tax sources cultivation and the relationship between structural tax reduction and long-term tax sources cultivation, foster local tax sources actively through fully exerting the leverage of taxation. Secondly, promote a sound growth of economic tax sources based on balanced development of industries. With clear direction of tax sources development, present suggestions on balancing the development of pillar industries and promote a harmonious development of industries including Finance, High-tech, Business Service, Culture Creation and Real Estate. To realize a sustainable development of taxation, present suggestions on building ecological conservation area, cultivating creative agriculture and industry group of science and technology. Thirdly, suggest establishing a benign interaction between economy and taxation. To stimulate the development of high-tech industry and construction of tax information, and to formulate a social supervision system for taxation through improving incentive mechanism of self-directed innovation, building up a harmonious relationship between tax authorities and taxpayers, setting up the consciousness of active service, and enhancing the compliance of taxpayers.On the basis of the study, we draw a conclusion, through a comprehensive analysis, that the local tax revenue in Beijing grows faster than GDP with similar changing tendency and relevant gross quantity. With a relatively stable tax system, it's a normal phenomenal that tax revenue growth exceeds GDP growth. From the point of view of industries, the proportion of secondary and tertiary industries, both of which grow faster than primary industry and make a great contribution to tax revenue, keeps rising. Therefore, continuous increase of taxable GDP is the main pull factor that causes the local tax revenue in Beijing to grow faster than GDP. From the point of view of tax categories, there has the phenomenon of overlapping tax and still is lack of correlation between tax categories and tax bases in current tax system that make it possible for tax revenue to exceed economy growth. Macro tax burden in Beijing which is lighter than that of the whole country still has room to be raised. That continuous increase of macro tax burden could promote local tax revenue to grow faster than GDP is closely related with the low tax policies that propel GDP growth and the development of economy. The model analysis indicates that the economic growth contributes 55.4% to the increase of local tax revenue in Beijing while policies and tax collection and administration contribute 44.6% to the increase. Among economic growth factors, continuous increase of taxable GDP is the main pull factor that causes the local tax revenue in Beijing to grow faster than GDP...