The Study Of The Merging Process Of Two Taxes Based On The Behavior Of Stakeholders

With the deepening of China's reform and opening upand economic growth, two -tax law more and more play its negative role, which highlight the necessity and urgency of two-tax-merger, but two-tax-merger went through twists and turns. This paper analyzes acts and Game relation of the stakeholders in the merging process of two taxes, explains inevitability .twists and turns of the merging process of the two taxes, gives a genera] analysis formulation of the public policy process.This paper, firstly, from the perspective of national interests, with China at different stages of the domestic and international situation. historically and dialectically analyze the positive and negative effects of the two-tax law and foreign investment in China. Once favorable two-tax policy more and more isn't conducive to the country's development, and the merger of two-tax is inevitable and urgent. Then it discussed the behavior and Game relations of the four major stakeholders—the central government, local government, domestic-funded enterprises and foreign-funded enterprises involved in China's current political and economic environment, which shows the existence of free-riding behavior of individual enterprises ,conflict between the individual and collective rationality, absence of the independent industry association to represent enterprises interests and coordinate collective action,so domestic-funded enterprises are not qualified as a Game participant. The central government and local governments both will adjust preferential policies and implement the national treatment for foreign investors at last. But the central government and local governments are different to attract foreign investment. The local government hopes to give foreign investors more concessions, the introduction of more foreign capital and delaying the process of merging two taxes. But the central government in the implementation of the policy needs the cooperation and support of local government. The Game relations among the central government,local governments and foreign-funded enterprises, especially the central government and local government decides tortuous merging process of the two-tax. Finally this paper gives some proposals for the formulation of public policy combined with explaining the merging process of two-tax.