VAT Reform And Reconstruction Of The Central And Local Fiscal Relation

The "Twelfth Five-Year Plan" on speeding up the reform of fiscal and tax system puts forward:"expand the scope of value-added tax, correspondingly reduce business tax". As an important element of tax reform, tax reform, expanding circumference was put on the agenda. January1,2012Shanghai took the lead in expanding circumference VAT reform, August1,2013onwards VAT reform across the country spread around. Expand the scope of VAT collection, meant as a local government body sales tax levied taxes to reduce the scope of or even disappear. How to ensure that this tax reform in the vested interests of local government, for local government support for reform is the key to reform VAT expanding around.This article relies on optimal taxation theory, public finance and fiscal decentralization gauge theory to practice our value-added tax reform as a backdrop, the analysis of the implementation of VAT reform pilot expansion around effect, based on the description of this stage, the scope of VAT levied expand necessity; combined with the1994tax reform, the main source of local revenue tax and value added tax reform led to expansion around the fact that local fiscal pressures to explain the relationship between central and local fiscal adjustment on the value-added tax reform is an important expansion around sex and the relationship between central and local fiscal adjustment direction. Then put forward the relationship between central and local fiscal redefine the idea that progressive implementation of the VAT expanding circumference, design neutral tax rate, defined sharing ratio to protect local interests and actively building local tax system. In practice, in a reasonable definition of the central and local government powers as a starting point to moderate divided VAT revenue and supporting financial transfer payment as the key to a sound legal environment for the protection of specification, implementation powers between central and local governments and financial resources match VAT expanding circumference of the smooth progress of reform to create conditions.