On The Income Distribution Effect Of Value Added Tax In China

According to the data of the State Administration of Taxation,China's value-added tax reduction was nearly 400 billion in 2018,and since April 1,2019,China has further deepened the value-added tax reform and formed the third,value-added tax rates of 13%,9%and 6%.As an indirect tax,value-added tax will eventually pass on to consumers,which will have a significant impact on the tax burden and income distribution effect of Chinese residents.However,most of the previous studies focused on the impact of direct taxes such as personal income tax on Residents' income distribution,while the research on indirect tax redistribution effect represented by value-added tax is relatively insufficient.Therefore,under the latest value-added tax system,this paper studies the value-added tax income distribution effect,which provides reference for further deepening the value-added tax reform in China.In this paper,the normative analysis and micro simulation methods are combined to analyze the income distribution effect of the current VAT by constructing the input-output price model of VAT.The first part of this paper mainly introduces the research background and significance,combs the structure of the paper,and puts forward the innovation and shortcomings of this paper.The second part summarizes the conclusions and findings of the related classical literature from three dimensions of a method to measure the tax burden of VAT,the result of measuring the tax burden of VAT and index to measure the distribution effect of VAT,which lays the theoretical foundation for the following paper and puts forward the innovation direction of this paper.The third part of the paper is the model construction.Firstly,it analyzes the theoretical basis of residents' income distribution under the latest value-added tax system.Secondly,it introduces the input-output price model and constructs the input-output price model under the current value-added tax.Finally,it explains the data source and related processing of the article.The fourth part measures the tax burden,regressive(progressive)and income distribution effect of the current value-added tax.The fifth part is the conclusion and policy recommendations of the article.Based on the above analysis,the conclusions of this paper are summarized,and corresponding policy recommendations are put forward according to the current situation in China.This paper finds that:(1)under different tax collection capacity scenarios,the absolute amount of VAT tax burden and the annual tax burden rate of income decrease with the increase of income,and vat has a regressive nature;according to the tax burden rate of VAT calculated based on lifetime income,the regressive nature of VAT is weakened,even has a weak progressivity.(2)By comparing the situation of different collection capacity,we find that the stronger the ability of VAT collection and management,the heavier the VAT burden of different income groups,the stronger the VAT remission is.(3)Further using the CFPS(2016)analysis of the micro household survey database,it is proved that the value-added tax is regressive.The Gini coefficient,the generalized entropy index and the Atkinson index are all lower than the after tax index.Through the decomposition of MT index,it is found that the decrease of average tax rate caused by large-scale VAT reduction is the reason for the improvement of VAT regressive;the calculation of generalized entropy index shows that the impact of VAT on the inequality of low-income groups is higher than that of middle and high-income groups;the calculation of Atkinson index shows that the more unequal the distribution is improved,the greater the welfare effect will be.That is to say,improving the inequality of low-income groups is more conducive to the realization of welfare effect.The innovation of this paper lies in two aspects.On the one hand,considering the current large number of preferential tax policies in China and the lack of collection and management ability of tax authorities and other practical problems,according to the actual collection of value-added tax in China,the effective tax rate of value-added tax is calculated and used as the calculation basis of related effects,making the research results more accurate.On the other hand,the simulation calculation of this paper goes deep into the micro level.Using the CFPS(2016)database and the China urban(town)life and price yearbook(2012),under the current value-added tax system,the tax burden of value-added tax of different income groups of urban residents is calculated from the micro level,and the income distribution effect of value-added tax is further analyzed.