The Role Of Structural Tax Reduction In The Development Of Secondary And Tertiary Industries In China

The scheme "Structural tax cuts" was first proposed in the report of government work2004, after then, it has become the guiding ideology of government Tax policy. Compared with the previous polices, Structural tax cuts is more detailed selective and operable. It is an important means of macroeconomic regulation and control. Structural tax cuts does not mean the massive tax cut. It include two converse aspect,"tax increases" and "tax cuts". And structural tax policy stresses on economic restructuring and the transformation of economic development.It also makes reducing the tax burden on businesses and individuals as the starting point and end point. So this policy has an important role in the regulation of China’s industrial economy.Since the reform and opening up policies has been carried out, China’s industrial economy has made great progress, to achieve a smooth transition from a traditional agricultural country to a modern industrial country, the proportion of tertiary industry in the national economy has also been greatly improved. But there is still a series of problems in the development process of industrial economy, the biggest problem in the development process of China’s industrial economy is the irrational industrial structure, and the most irrational industrial structure is about China’s second and third industry. Compared with the United States, Japan and other developed countries, the development of China’s tertiary industry is seriously inadequate, while the development of the second industry development is excessed. Industrial structure is extremely unreasonable, and we have not yet developed into a large service economy country. For the structural problems that exist in the economic development of the industry, the government need to pursue the "increases and decreases "tax policy at sub-sectors, sub-industry and sub-enterprises. In fact, in2006, after the regulation of the industry in terms of development, the government has launched a series of structural tax policy, including tax reform, VAT transformation and adjustment of export tax rebate rate.These policies were carried out in different areas of regulation, and achieved good results. The VAT reform which persuing in the field of industrial enterprises has achieved the greatest impact.VAT reform is the transition from production to consumption-based, allowing industrial companies deduct VAT included in the purchase of equipment.This tax policy mostly promoted the industrial enterprises to accelerate fixed assets transformation and upgrading. However, being affected by many factors, the function of structural tax policy in promoting the healthy development of the industry has not been fully effectively exerted. There are many problems need to be solved, such as the preferential policy instruments, the direction of the control. The potential of the policy need be further excavated. Therefore, combining the structural tax reduction and industrial development theory is very meaningful. To study the role of the structural tax system in promoting industrial development is very significant.Firstly, the article has done a correlation analysis about structural tax cuts and industrial development, including the industrial division, the law of industrial evolution, the status of the second industry and the third industry. At the same time, it also defined the contents and objectives of structural tax cuts, on the basis of what analysed before, we analysed the possibility and necessity of structural tax regulation in the area of the industrial development. Secondly, this paper reviewed the development of specific practice in the industry since the implementation of structural tax cuts, including the VAT transformation, the consumption tax reform, the adjustment of export tax rebate rate and corporate income tax reform. Based on these tax policies, we sum the characteristics of the existing structural tax policy. Again, from both theoretical and empirical aspects,we introduced the role of structural tax cuts in secondary and tertiary industries development. In theory, we described the mechanism of regulation of industrial development revenue, mainly elaborated from two angles of demand and supply. we also analyzed effects of structural tax cuts in the development of the second and the second industry. In addition this paper used the VAR model to investigate the effects of Structural tax cuts on interactive dynamic relationship between the GDP of Secondary and tertiary industries and taxes based on2001-2010panel data of31provinces and cities.By using the penal VAR, impulse response analysis and forecast variance decomposition, we found that more significant secondary industry tax cuts policies had a positive impact on secondary and tertiary industries development in the short term, while more significant tertiary industry tax cuts policies had no specific incentive effects on secondary and tertiary industries development. Therefore, the Government should continue to maintain the tax cuts polices for t secondary industry and increase the tax cuts polices for tertiary industry at the same time. Government should continue to promote the reform of structural tax cuts. On the one hand we should improve the industry’s structural tax cuts for the second industry,changing the control means, making clear control objectives, then focusing on promoting sustainable development of the secondary industry. On the other hand, the government should also increased the efforts of structural tax cuts to promote the prosperity and development of service industries, particularly modern service industry.