Analysis On The Effect Of Transformation From Business Tax To Value Added Tax

Since the end of2008, the government of China explores the structural tax cuts actively to achieve targets for our public finances, just as growth, adjusting economic structure and human development. The transformation from business tax ("BT") to value added tax ("VAT") has been improving, gradually entering the stages of the important reform. VAT reform is gradually perfect. Firstly it is transformed from production type of VAT to consumption type of VAT. Secondly, the scope of VAT is expanded to total BT sectors. Lastly it will cover the production and service sectors of all links. Thereby the problem of multiple taxation is solved as well as the tax collection dilemma. It makes production, circulation and multiple taxation become history. It is said that the transformation from BT to VAT is an important step of fiscal and taxation system. We can come to a conclusion on the basis of research literatures that it is necessary to discuss the major issue of the policy. The elements affecting the transformation from BT to VAT policy are the differences of both the administrative level of the local government and the industry differences, as well as the elements differences.Further studies demonstrate that we can analyze the effect of the policy in the North’s institutional framework. Therefore, this article has built an analysis of framework. Firstly, the transformation from BT to VAT changes the tax burden of taxpayers. In succession, the transformation from BT to VAT changes the research and innovation of enterprises. Then, it changes the investment income of human capital. Finally, it changes the process of legal provisions. We make an analysis of the effect on the basis of the elements above. We can come to a conclusion that firstly, it is not the administrative grade that affecting the policy but the institution, secondly, the policy has benefited the upgraded and technological advancement of the enterprises, thirdly, the policy has no evident effect on the human capital gains now but it accelerates the working conditions. It is the most important to build an institution that participated widely and proceeding the legal provisions. And then the dissertation puts forward some policy suggestions on cutting down the trading costs of the market to promote the economic and social performance. Firstly, we perfect a fair and equitable taxation system by promoting taxation legislation of policies and raising the effectiveness of the taxation cost; promoting the reform of the administrative system, etc. Secondly, the government department is to be streamlined. It is quite important to increase the transparency of fiscal revenue and expenditure in order to cultivate full growth of markets and rebuild the resource configuration system. By the authority of rational redefinition of power and the main basic public services responsibilities, it is beneficial to establishing a long-term mechanism of the reform in the framework of reducing trading costs of the market.