The Measurement Research Of Tax Capacity Of Shandong Province

Taxation is the most important source of government revenue. The government cannotfulfill the social functions well without enough taxation. And it must affect thedevelopment of economy, if the taxation increases too high. Then the government shouldtry to ensure that the taxation is kept in the reasonable range. This is the starting point ofthe paper. Based on the summary of the theoretical knowledge and the measurementmethods, we measured the tax capacity and the VAT (Value-Added Tax) tax capacity ofShandong Province with SFA (Stochastic Frontier Analysis) and RTS (Representative TaxSystem).Based on the review of the literature and theoretical analysis, we construct a logisticalsystem for the measurement of tax capacity. The research of the measurement of taxcapacity and VAT tax capacity is according with this logistical system. The measurement oftax capacity is based on the panel date. The variables chosen in the SFA model include thereal per capital GDP, CPI (Consumer Price Index), the proportion of value-added ofsecondary/tertiary industry to GDP, the ratio of total foreign trade to GDP, etc. The resultsshow that:1) the tax ability of Shandong province and all the cities grow faster than theirGDP. And the average tax ability of coast area is greater and faster than the tax capacity ofinland area.2) The tax ability is oddity in2009, because of the economic crisis, tax policy,and tax reform.3) Different cities have different tax burden. Generally, the cities with alarger first industrial proportion have a lighter burden, and the cities with a largersecondary industry and a higher economic openness has a heavier burden.4) The citieswhich have a heavier theoretic macro tax burden have a higher tax loss rate, too.During the measurement of the VAT tax capacity with RTS, we choose the industrial,and wholesale&retail as the standard tax base, and the regression relationship between thestandard tax base and the VAT as the standard tax rate. The results show that the averagetax rate of VAT decreased significantly after the VAT transformation in2009. However, theeffect of VAT tax capacity was very lightly.