Research On The Fiscal Capacity Disparities From The Perspective Of Inter-provincial Transfer Of VAT

After replacing business tax with VAT,the proportion of VAT in tax revenue has increased,and local governments rely more on VAT.However,the characteristics of VAT,such as easy transfer of tax burden and the distribution principle based on production place,will lead to the separation of tax revenue and tax burden,which is the transfer of VAT revenue.When this separation involves different provinces,it will form the inter-provincial transfer of VAT.The levels of VAT inter-provincial transfer will vary with the regional imbalance of production and consumption,which not only makes it difficult to realize the tax fairness between relevant provinces and maliciously expand the fiscal capacity disparities,but also is not conducive to the equalization of basic public services among provinces and the coordinated development among regions.Therefore,it is urgent to analyze the mechanism of inter-provincial transfer of VAT and its impact on fiscal capacity disparities,so as to narrow the disparities of fiscal capacity through the adjustment of VAT,which is helpful to speed up the realization of common prosperity.Firstly,guided by the principle of tax equity,this thesis expounds the necessity and urgency of narrowing the fiscal capacity disparities on the basis of the theory of public goods,fiscal decentralization and the equalization of basic public services.Based on this,this thesis deeply analyzes and studies the causes of "inter-provincial transfer of VAT" and the mechanism of its impact on fiscal capacity disparities.Secondly,the Theil index and Gini coefficient are used to measure the fiscal capacity disparities,showing the current situation and trend of fiscal capacity disparities.The research shows that from 2007 to 2019,China’s fiscal capacity disparities experienced the change of first decline and then rise,and the change occurred in 2012.Establish the VAT inter-provincial transfer index,investigate the VAT transfer degree of each province and the VAT transfer characteristics of different regions,and divide 31 provinces into continuous inflow area,continuous outflow area,inflow to outflow area and outflow to inflow area.It is found that the continuous inflow area is concentrated in the Eastern region,and the continuous outflow area is mainly concentrated in the central and western regions.Thirdly,it analyzes the impact of inter-provincial transfer of VAT on fiscal capacity disparities.Through the decomposition of Theil index,this thesis analyzes the disparities between regions with different types and the size of inter-provincial disparities within regions,and finds that inter-provincial disparities within regions are the main reason of total disparities,especially in continuous outflow areas.The disparities contribution of the eastern and western regions is significantly higher than that of the middle and western regions.Through the decomposition of Gini coefficient according to income source and the comparison of Gini coefficient under different VAT revenue distribution principles,this thesis analyzes the contribution of VAT to the total disparities under the principle based on production and the principle based on consumption.It is found that the first one will significantly expand the disparities of fiscal capacity,and the disparities of fiscal capacity under the principle based on consumption will significantly decrease.Using QAP,a relational data analysis method,this thesis studies the impact of inter-provincial disparities in the degree of VAT revenue transfer on fiscal capacity disparities.The results show that in the whole research stage(2007-2019),whether it is full-time analysis,timedivision analysis or analysis year by year,the inter-provincial disparities of VAT revenue transfer show a positive impact on fiscal capacity disparities,which means the greater the inter-provincial disparities of VAT revenue transfer,The greater the disparities of fiscal capacity,and the provinces that benefit from the inter-provincial transfer of VAT often similar to the "rich" provinces.Finally,according to the above analysis,this thesis puts forward short-term,medium term and long-term policy suggestions to reduce the fiscal capacity disparities.In the short term,we should gradually adjust the vertical and horizontal distribution proportion of VAT.In the medium term,coordinate the relationship between VAT and other taxes.In the long term,determine the final belongs of VAT.