Positive Analysis Of Tax Rebate Policy Of Chinese Manufacturing Exports

Since formally implemented in China1985, export tax rebate policy has been one ofthe important tools of the trade with frequent adjustment in recent years. Coincided withChina’s rapid economic growth, export tax rebate has a certain influence on both exportsgrowth and industrial restructuring in the past28years. Since China’s foreign exchangereserves has been long for the top, earning foreign exchange and increasing exports willno longer be the main purpose of the export. As export scale grows, local fiscals feel thedrawback too hard to burden because of the imperfect VAT system and rebate operationmechanism in China. Besides, in some places drawback is insufficient while in someother places cheating for drawback is not rare to see.Academic debate among export tax rebate never stops, some scholars raise somesuggestions to improve the operation mechanism; some from the perspective of tax holdopinions against export tax rebate for its distortion of market competition; while someothers suspicious the effect on export tax rebate from the perspective of economics.Determine the purpose of tax rebate first is critical to analyze the policy, and appropriateanalysis method is directly related to the conclusion.In this paper, the author starts with the purpose to increase the welfare of the country.Under the framework of Cournot model, effect of export tax rebates relating to welfarewill be discussed. From the initial model to the extension model, the criteria to use exporttax rebate policy will be examined under different export market structure and thedetermination of rate as well. This paper consists of five parts, the first part introducesthe academic research results to export tax rebate; the second part introduced the duopolymodel, under the assumption of single market and homogeneous goods, discuss the effectof the export tax rebate policy; the third part is the extension model with more number ofparticipants, to find the effect of tax rebate under different export market structure andthe determination of the optimal tax rebate. The second and third part explains theresearch method and draws the conclusion that export tax rebate policy is most suitablewhen the number of export manufacturers is small. The determination of optimal taxrebate rate equation of the model is the basis for the econometric model. The fourth part establishes econometric model to examine the factors of export tax rebate ratedetermination. This part selected several representative industries, provide arguments forthe export tax rebate policy implementation effect. The last part is the conclusion thatprovides some improvement suggestions based on the analysis and measurement resultsabove and some problem of China’s export tax rebate as well.