The Study On The Tax Competitiveness Of China

In the economic globalization, the quality of a country’s investment environmentdetermines its’ attractive ability of economic factors. Taxation is one of the factors ofinvestment environment, so the improving a country’s tax competition plays an importantrole in creating a good investment environment. A country’s tax cost is an internationalmeasurement of tax competition. The cost of paying taxes influences the quality ofinvestment environment and the attractive ability of international production factors. TheWorld Bank and Price water house Coopers jointly issued a" global tax cost report" and theForbes release " tax misery index report".They respectively rank the tax competition ofmost countries in the world through two indicators: tax cost and tax misery index, and therankings had also become the reference of international investors to make decision oninvestment. Although the two lists have unreasonable place in the computational methodand data acquisition, the two lists presented to the world that our country tax cost is higherand we have to strengthen the tax competition. Therefore, it is necessary for us to make thepresent situation and influence factors of our country tax cost clear through investigationand study, and then analysis the existing question of China’s tax system in-depth; proposesthe reform measures, to reduces our country tax cost, improve the tax competition andultimately to promote economy development.In this paper, basing on the domestic and international related research on taxcompetition, through the research approach of comparative analysis, we obtain that the taxcost in our country is higher, which affects the tax competition. Then we put forward thaton one hand we should reduce the tax burden by reducing the social security payment rateand the individual income tax rate, reduce the tax compliance cost by simplifying the taxsystem; on the other hand, the rate of value added tax may be decreased appropriately toincrease revenues, what’s more, pay attention to the redistribution fairness. Then we canimprove the competitiveness of China’s tax revenue, and promote the sustainable development of economy.This paper mainly consists five parts:The first part is introduction. In this chapter I point out the background of this paper.Under the background of economic globalization, national tax system breaks through theborders of its country, and influences other countries, especially the countries withcompetition relationship. Then I point out the significance of the topic: tax competition hasincreasingly become a topic of concern to all countries in the world, the research on whichis has been carried out for many years. Then through the domestic and foreign research ontax competitiveness, I put forward the research contents: through the analysis of" globaltax cost report" and" tax misery index report", make the present tax cost of our country andinfluence factors of it clear to discover the problems of our tax system, and then putforward specific policy suggestions of tax reform.The second part is the basic theory of international tax competition. The part iscomposed of four sections. The first section is the meaning of international tax competition.On the basis of representative domestic and foreign meaning, I put forward the definition.In section two, after the discussing of the relationship between tax competition and theeconomic development I point out that moderate competition is good to economicdevelopment. In section three, I propose the evaluation index of the ability of internationaltax competition. In section four, I discuss the factors that influent tax competition.The third part is the introduction and evaluation of the global tax cost report and thetax misery index report. In this part I mainly discuss the overall situation of the two reports,and then evaluate them.The fourth part is the comparison and analysis on the tax competition ability of ourcountry. In this part, the impact factors of China’s tax competition are comparativelyanalysed through data. By comparison, China’s enterprise income tax, and value added taxare competitive, while the personal income tax and social security payment are not. And inthe final section, I conclude that our tax competition ranking behind is due to the following problems of the tax system: the rate of personal income tax and social security tax is higher,the preferential strength to small and medium-sized enterprise is not enough; the taxsystem is complex, which increase the tax compliance cost.The fifth part is the policy recommendations to raise our country tax competition.First of all, we should reduce the top rate, raise the minimum rate and reduce tax leveldistance of the individual income tax, and establish the integrated tax system basing on areasonable deduction; secondly, reducing the social security payment rate; thirdly,reducethe income tax rate of the small and medium-sized enterprise; fourthly, we should mergeVAT and business tax on lessoning from Shanghai’s experience and raise the value-addedtax rate which is a guarantee for finance income, and on the other hand provide space forother tax rates’ raising, and achieve complete tax rebate to reduce the burden of enterprises;fifth, establish the tax law dictionary and improve the efficiency of tax collection to reducethe tax compliance cost.Because of my limited ability, the data mastered is not comprehensive and existingdefects. For example, I didn’t establish a mathematical model, so the analysis of theproblem is not sufficient. The feasibility of the tax reform proposals needs further proofing.