The Impacts Analysis Of Expanding The Scope Of VAT On Finance Income In Liaoning Province

As China’s largest tax, VAT shows its advantages in China in the past three decades.VAT has basic functions of raising revenue and ensuring financial income stably,furthermore it avoids double taxation, optimizes resource allocation and promotes theupgrading of the industrial structure. However, the scope of China’s value-added tax doesnot cover all goods and services, only the production of goods, wholesale, retail andimport levy value-added tax, in addition, processing, repairs and replacement servicesfield are also included.In the case of the two tax working, the business tax whose taxbase is turnover does not have a VAT deduction characteristics. In the actual operation,the deductible chain is incomplete and the tax burden will increase with the transfer ofpart, resulting in double taxation. This Point affects the deepening social division of laborand the optimization of industrial structure adjustment, hindering the growth of serviceindustries. Therefore we must further deepen the reform, expanding the scope of VAT.The reform of expand the scope of VAT is putting on the agenda after completing thetransformation reform in2009. Expanding the scope of value-added tax refers to changethe tariff lines of business to the VAT and then canceling the business tax. By eliminatingthe tax institutional barriers in the development of the service industry, make the taxsystem reasonable and promote the service economy restructuring and the transformationof economic development ways. January1,2012, in the transportation and modernservice industry the pilot of VAT reform in Shanghai spearheaded. The reform will bepostponed to the country.First of all, this article from the background of the VAT reform and the presentsituation, analysis of the present situation of the coexistence of value-added tax andbusiness tax through a series of data. Parse the reason of implementing the value-addedtax as the biggest tax in central government in China and the business tax as the biggesttax in most local governments in our country at the same time in the tax reform in1994.From tax principle, legal policy, tax management, financial system level this paperanalysis a series of problems created by coexistence of value-added tax and business tax,which leads to the necessary of the VAT reform. Basing in Liao ning province fiscal income, through the simulation calculation and analysis of the effects on the VAT reformto the fiscal revenue in Liaoning province, the paper has great influence of pushingreform steadily and having a success reform in Liaoning province. Using the input-outputtable, this paper estimates the change of Liaoning province’s fiscal revenue from VATreform under different solutions and puts forward the corresponding suggestions toprovide data supporting in the future VAT reform.