The Present Situation And Improvement Of Trying Outvalue-added Tax Pilot Reformin Our Country

Value-added tax and business tax are the most important commodityturnover tax in China. The range of value-added tax collection issecondary industry which mainly includes the production andmerchandising of products, except for construction business. Andbusiness tax is imposed in most of tertiary industry which mainlyincludes labor serviceThe commodity turnover tax system in1994accords with the economic system and the ability of imposing tax at thattime and makes an important contribution to promoting the economicdevelopment and growth of fiscal revenue. But with the development ofmarket economy of our country, the way of choosing different taxcategories according to the industry and trade gradually reveals its impropriety and limitation. It is not good to the economic operation andthe optimization of the economic institutions.Our country began to collect value-added tax from the enterprises inTransportation Industry and part of Modern Service Industry who werecollected business tax in Shanghai as the pilot area on January1in2012.State Administration of Taxation issued Cai Sui[2012]No.71whichannounces the Value-Added Tax Pilot Reform area is extended to8Provinces/Municipalities,which are Municipality of Beijing, Municipalityof Tianjin,Jiangsu Province,Anhui Province,Zhejiang Province (includingNingbo),Fujian Province (including Xiamen),Hubei Province,andGuangdong Province (including Shenzhen) on August in2012.The Pilot Reform takes place against a background of theunbalanced tax system and tax structure in our country. And the reasonfor the Pilot Reform is to reduce tax for medium and small-sizedenterprises, to promote sound and rapid development of the NationalEconomy, Modern Service Industry, and to promote National EconomyTransition.Since Shanghai piloted Value-Added Tax Pilot Reform, the totalrevenue has been declined. Parts of secondary industry and tertiaryindustry can use input tax credit each other. The revenues from mediumand small-sized enterprises, especially from small-scale taxpayer haveobviously decreased. Relative to the policy goal which is Macro-economic Control and Structural Tax Reduction, the effect ofValue-Added Tax Pilot Reform is inconspicuous now. From theshort-term goal, though the enterprises who are the service accepters canuse the input tax credit made by the modern service enterprises, burden oftaxation is reduced inconspicuously, even.increased appreciably, becausemodern service enterprises cannot accept the input tax credit. It dampensthe enthusiasm of the masses of the enterprises. Thus, it is far from thelong-term goal that promotes the structural adjustment of economics.The next policy recommendations of Value-Added Tax PilotReform”is to pilot reform in posttelecommunications, rental service ofconsumer services and banking of finance&insurance first.Andconstruction industry and real estate sales should delay the reform.