Research On The Improvement Of Sharing System Of Value-added Tax Against The Background Of "Large-scale Shared Tax"

The construction of intergovernmental financial relations has been underlined as priority by the 19 th National Congress of the Communist Party of China when it comes to reforming of the fiscal and taxation system.It demands speeding up the establishment of a modern financial system and establishing a central and local financial relationship with clear power and responsibility,coordination of financial resources and regional equilibrium.As the thorough reform of replacing business tax with value-added tax goes on,the revenue of shared-tax came up to 70% of the total tax revenue.The age of “large-scaled shared-tax” is coming.China carries out the mode as “based mainly on shared-tax and partially on exclusive tax”.As the revenue of value-added tax(VAT)for share surged,the distribution of VAT has a greater influence on intergovernmental financial relations.The sharing system of VAT has a tremendous influence on the distribution of financial resource between governments at all levels,as well as the action of different governm ents.Currently,related reforms are still not completed,such as reforms of governance and expenditure responsibility,the transfer payment system and local tax system.In this background,the disadvantages of current sharing system of VAT come to light.An improved sharing system of VAT is badly needed.Considering status quo and functions a sharing tax has,sharing VAT between governments is needed.VAT should not only help make up governments' shortfall in funding,but also improve fiscal balance between regions,the later should be put more emphasize on.This paper analyzes the principles that should be adhered after analyzing the function of VAT Revenue Sharing System.Then the paper analyzes the effect of current VAT revenue sharing system.Proved by theoretic analysis and data test,we found current sharing system of VAT widens the fiscal gap between regions and the deviation between tax revenue and tax source.It may also make the “tax distribution” degenerate to “share cropping”.There are several similarities of political and public finance system between China and Germany,so it's feasible for us to learn lessons from Germany's VAT system.After comparing china's sharing system of VAT with Germany's,we can borrow ideas from Germany's sharing system of VAT.This paper came up with optimization strategy on the topic,sharing VAT between central government and provincial government should be grounded on governance and expenditure,sharing VAT among provincial governments should be based on destination principle.To optimize sharing system of VAT also need establishment of supporting systems.Data analysis based on “Input-Output method” proved that it is reasonable to stick to destination principle.This paper come up with the idea that take several factors such as population,the demand of local public service,local economy into consideration when allocating VAT within local governments.Mechanism that improves fiscal balance between regions should be considered.