Local Tax Reform Study Under VAT Reformed To BT-the Feasibility Of Consumption Tax Revenue Sharing

The tax reform in 1994 has established a system of fiscal decentralization in China, dividing tax system divided tax in central, local and shared. This pr ovides financial support for the Chinese central and local government to achieve their functions, mobilizes the enthusiasm of central government and local governments and on this basis, a local tax system is formed, has played an important role in local economic development. VAT reformed to BT in 2013 break the pattern of local tax system that business tax income is the main source of local tax revenues, other taxes is complicated and in small proportion. The main tax loss, a significant reduction in local fiscal revenue, resulting in an unequal contradictions in local government powers and financial resources, local tax system reform has become necessary, to find a suitable substitution tax instead of business tax for local governments to provide sustained and stable tax revenues was even more urgent.The current domestic scholars from the Construction Main Local Taxes viewpoint for local tax reform, some proposed let the building tax, corporate income tax, resource tax and other existing tax transform to Main Local Taxes, and some proposed to levy new taxes to replace the sales tax. All these recommendations have problems. The innovation of this article is from the perspective of local tax revenue, looking for the tax that can instead of sales tax revenue and has become the main source of local tax revenue taxes. After analyzed the feasibility theoretical and practical operation of the consumption tax, and the consumption tax reforms to shared tax, the consumption tax revenue can be a powerful support to local tax revenues, and on this basis, I propose some suggestions on the consumption tax becomes a shared tax reform, the reformed consumption tax can better play its role in the local tax system, adapt to the realities of China’s national conditions, and in line with the socialist economy.This paper is divided into five parts: The first chapter questions, explains the background and significance of the study, presents research results, illustrates the point and the lack of innovation and research methods of the article; the second chapter lists the theoretical basis of local tax reform, defines the concepts of local tax and local tax system, describes the theoretical basis of constructing the local tax system, firstly describes the local tax system rationality of existence by theory of public goods and fiscal decentralization theory, then explains local taxes necessity and imperfect reform by tax reform theory; The third chapter reviews the history of the development of local taxes since the tax system reform, and now VAT reformed to BT inverted extract unreasonable local tax system, reform of the local tax system is necessary; the fourth chapter analysis the feasibility of consumption tax revenues as the main source of local tax revenue, and analysis the feasibility of consumption tax becomes shared tax; the fifth chapter in terms of the tax base and tax rates, propose s some suggestions about the transformation of the consumption tax to sharing tax. It proposes to adapt to China’s national conditions should be appropriate to expand the luxury products, high energy consumption, high pollution and consumer tax base, to cancel part of taxable items, and to adjust the number of tariff rates.