Research On The Influence Of Replacing BT With VAT On Income Distribution Between Urban And Rural Residents In China

Since the reform and opening up,China's economy and society have undergone great changes.People are living a better life and our country has become more powerful.However,the contradiction of income inequality has become more prominent.Solving this contradiction is already an important task of the Chinese government.Tax policy is an important means for the government to regulate income distribution and promote social equity.Changes in tax policies may affect income distribution.Replacing BT with VAT is another profound reform of the fiscal and taxation system in China since 1994,which will have an impact on many aspects of economic and social development,especially on tax reduction.The impact of VAT and BT on income distribution is different,so replacing BT with VAT may affect income distribution.We don't know if it will have a positive or negative impact.On the basis of relevant theories,this paper combines theories with the actual situation of China,and uses empirical analysis to analyze the impact of replacing BT with VAT on the income distribution of urban and rural residents.This paper explores the path of future reform of value-added tax from the perspective of optimizing residents' income distribution.In the third chapter,the paper analyzes the current situation of the income gap between urban and rural residents in China from the perspective of time and income structure.Judging from the current situation of the income distribution of Chinese residents,we can't ignore the gap between the income distribution of urban and rural residents in China,and the gap is still widening.replacing BT withVAT mainly affects the income distribution of urban and rural residents through income effect and expenditure effect.This paper analyzes its impact mechanism in detail in the fourth chapter.In the fifth chapter,I calculate the Theil index of each region from 2000 to 2015 to measure the income distribution gap between urban and rural areas.Then use the two-step method of the system GMM model to analyze the impact of business tax and value-added tax on the income distribution gap between urban and rural residents.It is concluded that the value-added tax and business tax have a significant positive impact on the income distribution gap between urban and rural residents,and the impact of value-added tax is greater than the business tax.Combined with some current mainstream views,it is believed that replacing BT with VAT is likely to widen the income gap between urban and rural residents.In the future,we should consider how to reduce income distribution during the VAT reform process.So I propose the following suggestions: The government should appropriately reduce the standard rate of VAT;The government should reduce the value-added tax burden of the Industry that produces necessities;Reduce tax incentives and broaden the tax base.