The Study On Measuring Taxable Capacity Of Value-Added Tax In China

The research on the estimation of taxable capacity has important implications on the tax administration. Measuring taxable capacity contributes to improving tax collection capacity, achieving a better design of tax reform, optimizing the tax system and improving fiscal transfer payment as well as its efficiency. The research on the estimation of taxable capacity in advanced economies has produced a large amount of literature, whereas domestic literature is scarce. Therefore it is imperative to strengthen the research on the estimation of taxable capacity and its application in China so as to guide domestic tax administration practice.With the value-added tax (VAT) being the primary tax in China, the aim of the dissertation is to measure the VAT taxable capacity in China. The dissertation develops a model for measuring VAT taxable capacity and applying to the data in China, thus laying a foundation for further theoretical research and application on measuring China's taxable capacity. The dissertation combines the normal analysis and empirical analysis. It first introduces the background, implications and key concepts of the research on taxable capacity and reviews literatures both at home and abroad. Then it analyzes and compares main methodologies of measuring taxable capacity and tax gap, and summarizes the practices and experience on estimating taxable capacity and tax gap of value-added tax in advanced economies such as the UK. On this basis, the dissertation conducts an empirical study of VAT taxable capacity in China by adopting the approach of input-ouput analysis. It analyzes the conditions for the estimation, develops a model for the estimation, and measures the VAT taxable capacity in China during 1994-2007. The main conclusions are the VAT taxable capacity in China has been rising markedly, while the tax ratios first declined, followed by a rise, which was consistent with the situation of tax collection in China.