Research On Reconstruction Of Local Tax System After The Policy Of Tollaly Replacing Bussiness Tax With VAT

Building a thorough local tax system is not only an important part of promoting the modernization of national governance system and governance capacity,but also an inherent need of constructing a modernized economic system.The current local tax system in China was established by the tax distribution reform in 1994,which played a positive role in promoting the balanced development of regional economy and society,adjusting the financial rights and affairs rights between central government and local authorities,and realizing the equalization of basic public services.After the implementation of “Business Tax Replaced with VAT” on May 1,2016,the original local tax system was impacted.And the local tax system problems that already exist are further highlighted,such as the lack of the main types of taxes,the narrow of local government tax power,the lack of means of tax collection and management,the weakness of local available financial growth caused by the reducing of the growth rate of local tax revenue and so on.All these problems have also led to the plight of local finance.And the phenomenon of the mismatch between administrative authority and financial power is more serious in local government,which not only frustrates the enthusiasm of local governments,but also causes that local governments rely on land finance more seriously.Meantime,it breeds illegal borrowing and exacerbates finance and banking risks.This has impacted on the original local tax system and a new round of tax reform is forced by “replacing business tax with value-added tax(VAT)”,so the reconstruction of local taxes system is urgently needed.The basic theory part of this paper starts with the definition of local tax to systematically analyzes the rich connotation and characteristics of local tax system,and based on the theory of public products and the theory of fiscal decentralization,discusses the necessity of constructing modern local tax system from the perspective of the modernization of national governance system and governance capacity.The paper then analyzes the development process of the local tax system in China,the current situation and existing problems of the local tax system after the comprehensive "replacing the business tax with a value-added tax",and looks for solutions to the construction of the local tax system from the historical evolution and practical development.What’s more,this paper selects the examples of local tax systems in the United States,Japan and France,and summarizes the experience and practices of these countries in the division of administrative power and financial power,local tax categories and transferring payment systems,and obtains inspiration and reference from them.Finally,based on the theoretical research and the analysis of tax statistics,this paper argues that to build a complete local tax system,the construction of tax legal system should be improved on the premise of scientific division of central and local authorities,so as to give local governments some tax legislative power.The principle of weak tax base liquidity,benefits,income stability,growth sustainability should be followed,and land value added tax,property tax and urban land use tax should be integrated.The long-term goal is to determine the real estate tax as the main local tax,and in the short term,by increasing the proportion of tax sharing,local governments can be guaranteed with reliable financial support to perform government functions.The reforming of auxiliary taxes of local tax system and resource tax,the promotion of comprehensive and classified reform of individual income taxes and the strengthening of collection and management of environmental taxes should be combined.The process of taxation management with information should be promoted,and a platform for comprehensive taxation administration should be created with strengthening local tax collection and management.Through comprehensive promotion and multi-level matching,a new round of tax reform is taken as a breakthrough to gradually build a local tax system that matches the modernization of national governance system and governance capacity.