| As the major reforms in current taxation system, transformation from BT(business tax) to VAT(value added tax)would have a significant impact in all aspects of economic and social development, including local fiscal revenue, industry tax burden, economic growth, industrial structure, income distribution, social welfare etc.This paper selects this point of view to analysis and research.That is, the impact of BT to VAT on the income distribution and welfare.Based on the brief introduction of BT to VAT background and the impact mechanism to income distribution, this paper focus on empirical simulation analysis.According each department actual VAT and business tax and corresponding value added and gross output to calculate the effective tax rate in various industries.Using the input-output model to build tax effects model on price,so as to calculate the effective tax rate in various industries.Establish contact between consumer expenditure structure in the yearbook of Chinese urban household expenditure and consumer price and the corresponding departments in input-output tables,so as to calculate the tax, each income level of residents paying and tax burden according to annual income level and lifelong resident income.And using the urban households statistical data in China Statistical Yearbook to calculate the GINI coefficient,both pre-reform and various reform programs, to evaluate the impact caused by the reform on the distribution of income residents. In addition, with the constructed model of the tax-price effects, and the utility function, consumer spending function, and the definition of Compensating Variation(CV) and Equivalent Variation(EV), on this basis,this paper constructs of the prices-welfare effects model.By calculating Compensating Variation and Equivalent Variation in various programs to evaluate the impact of BT to VAT on the residents’ welfare.The main conclusions of the empirical analysis in this paper including:First, using a single rate to expand is more pronounced on narrowing the income distribution gap.The program four, which using multiple rate to expand, the GINI coefficient only decline by 0.0541%, while program five, six and seven, which using a single rate to expand,the GINI coefficient decline by 0.0776%, 0.1311% and 0.1504%.That is,the more tax grade, the greater distortion to the economy and the more conducive to narrow the residents income gap.Second, transformation from BT to VAT is conducive to reduce the tax burden on residents.Whether using annual income or lifetime income to measure the tax burden on,whether the reform is in all industry or in part of industry, either single rate or multiple rate to expand, the tax burden on each income level of residents decreased after reform.With BT to VAT, business industry will increase the offset and lower the tax burden, while, due to the structure of intermediate inputs, the value added ratio and other factors, a small part of service sector will increase the tax burden.Overall,however, as a structural tax policy, tax effect of the reform is obvious.Third, the wider range of expand, the more help to narrow the gap in inhabitants income distribution.In program one, two, three, with expansion scope increased, the GINI coefficient decline,gradually. Thus, the more industries included in VAT tax,the more favorable to narrow the income gap between residents. Unified the tax system between services and business is Conducive to separate service sector from businesses with no additional tax cost.The development of the service sector can provide more jobs, help to improve the income level and have a positive regulatory role to narrow the income gap.Fourth, the reform did not change the VAT regressive.In the perspective of tax burden measure by annual income, on the whole, whether it is before or in various reform programs, the VAT and sales tax is presented regressive,that is, income increasing while tax burden decreasing, which is consistent with the view academia generally hold.From the perspective of tax burden measured by lifelong income, on the whole, whether it is before or after reform,the tax regressive weakened and showing a slight progressively.Fifth, the reform is helpful to improve the residents’ welfare.Whether in the whole or still in part of the industry to expand around, the residents’ welfare has improved with varying degrees compared to before in every simulation program except program seven.And the results show that the lower rate, the greater degree of welfare improvement.But if the tax rate is too low, it is difficult for financial to support and the large difference between businesses and service is not conducive to coordinate development in this two industries.Sixth, too high tax rate may lead to increased welfare losses.There was a turning point at the rate of 13% in Program seven, residents’ welfare,turn improving into worse. The tax rate from 6% to 11%, then 13%, theresidents’ welfare gradually weakened, at 13% appearing turning point, which indicating that too high tax rate will lead to increased welfare losses.Seventh, the real estate industry needs to be careful handling.In the three programs,which involve part of industry, although compared with before,overall,welfare level improved in a certain degree, but with the real estate included, the degree of improvement for residents welfare decreased.Therefore, from the welfare point of view, it must be handled carefully to the real estate.In addition,because the real estate industry business is complex and there are many technical problems to reform, it is need to be cautious to design the reform program.In last, according to the result from empirical analysis, this paper will put forward some policy suggestions including, the choose for tax rate; specific industries reform,such as financial, construction and real estate; exemption or cutting tax issues, such as,agricultural value added, certain special services industry, the necessities of life and the need to encourage development industry and the transition from business tax to VAT and so on. |
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