The Direction Of The Local Tax Policy Response To Inflation Conditions

Since1930, the inflation problem has been the topic of troubled governments ofthe world as well as the economics profession. In recent years, in America debt crisis,the European debt crisis on the world economic crisis, China’s economy also sufferedlarger stamping; just past2011, international external economic recovery is stillcomplex, economic growth gradually slowed down at the same time the reality ofhigh inflation, so that enterprises, hard ahead of the domestic market in the continuouschoice‘tanglement’.The anti-inflationary Keynesian theory holds that the tax increases,anti-inflationary theory of the supply-siders are embodied in the tax cuts.Analysis is not difficult to find, whether it is to take more taxes or take tax cuts,tax changes will act on both supply and demand, which together with the formation ofdemand effects and supply effects. To take tax policy levers to control the level ofinflation, they should co-ordinate the overall situation, it is necessary to considershort-term demand effects of factors, but also fully consider the long-term supplyeffects of factors, otherwise it will be planted to the balanced economic developmentin the future potential hidden or to contribute to future economic imbalances trend.From a practical point of view, the world in response to inflationary pressures, aremore or less to take some of their own tax policy, and some effective is still reallygood. Over the years, to curb inflation has taken a lot of initiatives, summed up innothing more than administrative control or market control. Controlling inflation andarduous task of a systematic, comprehensive use of various means of mutualcooperation in order to have a multiplier effect. Since China’s current inflation iscaused jointly by both demand and supply factors promote both demand-pull andcost-push inflation. Should proceed from the demand and supply to governance,China should adopt the policy mix for the expansion of the combination of supply andtightening demand. Expansion of supply and tightening needs a combination of policymix should be taken specific policy? Tightening demand is mainly to take ‘directedquantitative monetary tightening’ policy, the expansion of supply is to adopt astructural tax cuts and other policies to reduce the corporate tax.Local tax policy in conditions of inflation, how to approach? China’s localgovernments at all levels must be combined with their own situation in the province,from reality, the implementation of positive and robust structural tax cuts and tax increases to reduce the macro tax burden, thus achieving the sustainable developmentof the regional economy.In this study, a combination of the Finance, Public Finance, Taxation andregional economic theory of knowledge, analysis and judgment of China’s currenteconomic situation, revealing the inflation causes the transmission mechanism, affectthe outcome of inflation under the conditions of local taxpolicy responses to conductmore in-depth study, and specific coping strategies.