The Impact Of Raising The Proportion Of Direct Tax On Residents' Consumption

In 2013,the Third Plenary Session of the 18th proposed that the government should improve the tax system,deepen the tax system reform,improve the local tax system,and gradually increase the proportion of direct tax.What is the impact of increasing direct tax proportion on residential consumption?What kind of way to act on this effect?This paper argues that at the present stage,the study of the above problems will help to balance the policy implementation and path selection of the next stage of China's tax reform,and provide theoretical support for the scientific and rational promotion of China's tax system reform.This paper simulated the macroeconomic effect of increasing the proportion of direct tax,and focused on its effect on residents' consumption.This paper found that:Firstly,increasing the proportion of direct tax will be detrimental to the consumption of residents.But the resulting negative wealth effect will lead to increases working hours,and then increase the savings,investment and output;secondly,an increase in the proportion of incremental direct taxes will likely further increase the decline in household consumption.Decreasing the level of tax burden will reduce the damage of increasing direct tax on residential consumption.The results of empirical studies confirm that:(1)raising the proportion of direct taxes will squeeze out the consumption of residents;(2)the role of tax structure in the consumption of residents affected by the impact of different levels of tax burden.Based on the conclusion of this paper,we believe that in order to raise the proportion of direct tax and promote the consumption of residents,the government should reduce indirect tax revenue and then reduce the tax burden of the residents.through the reduction of indirect taxes,and should not be reduced in the case of indirect taxation?It means that,from the policy perspective,reducing the indirect tax revenue and then reducing the level of tax burden is the first step.Increasing the direct tax revenue and then increasing the proportion of direct tax is the second step.