Policy Analysis On The Problem Of Tax Burden Of Private Small And Medium - Sized Enterprises

Private Small and Medium Sized Enterprises (SMSE) play a pillar role in national economy, being the essential drive in domestic economy development. At the same time, the development of private SMSE is very sensitive to external influences. The country’s macro control policies as well as the change of global situation impose a profound impact upon the development of private SMSE.The development and strengthen of private SMSEs is in close relation to our country’s economic prosperity and political stability. Private SMSEs’healthy development will increase the total tax revenue and bring win-win situation between government and private SMSEs in the end. It is undeniable fact that business environment is tough for private SMSEs in China. For a long time, Chinese enterprises, especially private SMSEs have suffered from existing issues of heavy tax burden, large tax base and high tax rate. This situation will hinder private SMSEs’healthy development in the long term.The focus of this paper is the tax burden and its impact on private SMSEs. Based on research of existing documents, the paper analyzed the case of Bridge No.8in Huangpu District,Shanghai. By study turnover tax, income tax, property tax, behavior tax and lcoal authority charges, the paper analyzed current high tax burden and the impact over industry development as well as the policy environment behind the situation. At the same time, from the perspective of game theory, this paper investigated the government (both central and local government) and enterprise’s motivation and behavior respectively from tax collection and tax payment consideration. The research discovered the fact that private SMSEs generally resist the high tax burden negatively with low tax compliance. It reached the conclusion that both sides of the game (government and enterprises) would not fundamentally achieve optimal interest under unreasonable tax system.As to the countermeasure, the paper studied international comparable and suggested government decrease the tax burden over private SMSEs, improve related service, adjust current tax policies and restructure system.