The Choice Research Of Programs Of Expanding The Scope Of Chinese VAT Collection

Chinese VAT has always been in the slow process of institutional changesbecause of many factors. Our VAT is now keeping towards international standard withsome development. However, the main reason why VAT of China lagged behind manydeveloped countries is that the coverage of our VAT is not large. Expanding the scopeof VAT collection could effectively remove double taxation and unfair competition. Ithas being divided into several steps to arrive. And the key to expand is principle offair, efficiency and steady. Shanghai can offer some experience to our whole countryabout it. Input-Output table of61departments can extend SAM table. We can use thisto build CGE model to simulate reforms. And the impacts of different circumstancescan see from the model.In the short term, we should first integrate industries of transportation, catering,software, business services, postal service, culture, sports and recreation into VATscope. Known from CGE model results, uniform tax rate is better than discriminatorytaxs. Taking into account financial capacity and policy orientation, imposing tax rateof6%on these industries with Motor vehicle’s credit could make economy best.In the long term, the complete consumption-type VAT is optimal. Whether thepeople could share economic gain should be first considered. It means that the optimaltax rate make the growth rate of residents’ welfare be equal to GDP growth rate.Imposing the same VAT rate of13.5%on industries which were imposed turnover taxcan make more sence to economy. And when we think about the reformation of alluniform VAT rate,15%must be best.At the same time, related measures should be supported. Tax preferences whichbelong to turnover tax ought to be abandoned or transferred into reduced tax rates ortax refund upon collection. General threshold should be uniform and the exemptionthreshold. Some adjustments must be made between local taxation bureau andnational tax bureau, like changing share proportion of VAT rational, working morecollaboratively and building the risk early-warning mechanism. And legislation ofVAT can follow up. Punishment for tax illegality should be increased reasonably.