| As a social stabilizer, insurance is an important component of national economy. Since 1979, when domestic insurance business was restarted by the People’s Bank of China, our insurance market has developed for about 30 years, and has achieved impressive accomplishments. However, compared with developed countries around the world, our insurance market is still a new one. Insurance density and insurance penetration still need to be improved. Therefore, it remains a problem how to stimulate our insurance industry. And this article mainly discusses this issue from the perspective of tax burden.In China, two main taxes for insurance company are premium tax and income tax. Premium tax burden is relatively much higher and has greater effect on insurance company. Therefore, this article explores the impact on insurance industry from the starting point of premium tax. By comparing the similarities and differences of premium tax policy between China and other countries, a major problem is revealed that our insurance companies are faced with too much tax burden. The main reasons include:unreasonable tax base, high and "one-size-fits-all" tax rate.Does high premium tax burden have negative influence on our insurance industry development? Firstly, this article illustrates by Microeconomics method that, theoretically, high premium tax burden does have negative effect on insurance demand, supply and market equilibrium. Secondly, having integrated previous research, this article tested the theoretical result by sensitivity analysis and panel data empirical analysis. However, will reducing premium tax rate surely improve efficiency of insurance companies? This article analyzes 8 insurance companies with DEA method, and concludes that:for big companies, efficiency improvement is not obvious; but for small and medium size companies, a low premium tax rate can promote their development effectively. |
