The Study On The Relationship Between Tax Structure And Economic Growth In China

Taxation is an important economic means to regulate the allocation of resources and income distribution, tax structure is the overall layout and structure of a country’s tax system. The1994tax reform marked that China’s tax system construction has entered a new era of all-round development, and that modern taxation structure adapting to the market economy has gradually established. However,1994year tax reform strengthened the turnover tax as the main body of the tax structure. In tax design, it mainly emphasized the effect of VAT and ignored the income tax which could play an important role on the of economy intrinsic stability. This situation makes China’s tax structure lack elastic. The tax revenue is difficult to satisfy government spending when in the fluctuation of economy. Leverage of tax regulation on economy is limited.Combined with the present situation of our country that the main tax is turnover tax and that the tax structure is lack of elasticity, this paper uses China’s2001-2010provincial panel data to analyses from the perspective of tax categories. By establishing econometric measurement model, this paper investigates the effects of tax structure to gross economic development and its specific category. This paper proposals some policy recommendations, which may helpful for building a tax structure that is suitable for China’s economic situation.This article is divided into five chapters. Chapter one introduces the background, conceptions, research methods and ideas, and the innovation and deficiency of the article. Chapter two is the theory and literature review part. It contains2aspects on theories of tax structure and economic growth, and empirical study between these two subjects. Chapter three is the study of China’s tax structure and economic growth. It uses chart combined with forms to describe the relationship between the two subjects mentioned above and lay the foundation for the empirical study. Chapter four is the empirical study between tax structure and economic growth. This chapter first establishes related theory analysis model. Then by using suitable measurement methods and empirical econometric model, it makes analysis on effect of tax structure on the total economic growth, and the effect of tax structure on consumption and investment. Conclusion of the empirical study comes out. Chapter five introduces political suggestions. According to results of the other contents, this chapter is the further analysis of the impact of China’s tax structure on economic growth.