Study On The Pilot Project Of Substituting The Value-added Tax For Business Tax In Modern Service Industry

Vigorous development of modern service industry has important strategic significanceon China’s economic transformation and industrial upgrading. The pilot schemes andrelated policies were officially announced by the ministry of finance and the stateadministration of taxation. This reform is important to eliminate repeat taxes in modernservice sector, reduce tax burden on modern service industry, improve structure in taxsystem, deepen industrial division, and promote economic development on change ofpattern as well as structural adjustment. However, the impact on public finance system andtax agencies setting is enormous. Because of these reasons, the pilot program needsactively further promotion. The pilot reform needs to be carefully proceeded withcorresponding supporting measures and meticulous design.The pilot program of substituting the VAT for Business Tax in modern serviceindustry has theoretical significances on eliminating double taxations, reducing tax burden,improving tax system and optimizing tax structure. And it also has practical significanceson deepening industrial division, driving industrial upgrading and changing the mode ofeconomic development as well as revenue growth. Now there are great break though inreform path, reform orientation and tax design. Besides, there are great achievements in taxstructure improvement, structural tax reduction and industry promotion. However, thereare also many shortages, such as too much rates and too high standard for commontaxpayer. VAT is not though, and it is necessary to adjust the financial system betweencentral and local government. In the next step, it is need to expand the scope of reform,increase the pilot industry, reduce the rates levels and lower the standard for commontaxpayer. At the same time, the relevant supporting measures should be perfected. Forexample, perfect the VAT, build local duty, and increase government transfers.The author believes that the pilot project on substituting the VAT for Business Tax isthe inevitable choice to promote the fast and good development of modern service industry.Of the current pilot reform, the main theoretical significance is to optimize the tax structure,the main practical significance is to eliminate repeat taxation, and the main policy significance is to spread structural tax reduction. The next step of reform is to extend thescope of the pilot industry nationwide. Pilot project in consumer services can be carried outat the same time. The plan should be mature and detailed as soon as possible, steadilyexpanding the scope of the pilot.