Research On The Impact Of VAT Reduction On Residents' Consumption Upgrad

In recent years,against the backdrop of the global economic slowdown,consumption,as one of the three carriages driving economic growth in addition to investment and net exports,has played an increasingly important role in promoting economic development.Therefore,how to improve the consumption ability and willingness of residents has become an important issue for the government and academia.Accordingly,the government has actively implemented value-added tax reduction measures,effectively reducing the tax burden of residents and enterprises,but whether the tax dividend can further promote the upgrading of residents’ consumption remains to be verified.Under this background,it is of great significance for the government to study the impact and mechanism of VAT reduction on consumption upgrading.In this paper,the principal component analysis method is used to build a comprehensive evaluation system of residents’ consumption upgrading,and to evaluate and quantify the level of consumption upgrading in different regions of China.Based on the panel data of 31 provinces,autonomous regions and municipalities in China from2013 to 2020,this paper analyzes the impact of VAT reduction on residents’ consumption upgrading by using a two-way fixed effect model.The research finds that:first,the VAT reduction has a positive incentive effect on the upgrading of residents’ consumption.This conclusion is still valid after the robustness tests such as replacing the core explanatory variable,the explained variable,changing the sample time window,and removing the municipal samples;Secondly,the results of heterogeneity analysis show that the effect of VAT reduction on high-income regions,southern regions and regions with high consumption upgrading is greater;Thirdly,the results of mechanism analysis show that the VAT reduction mainly promotes consumption upgrading by affecting the income of residents,which reflects the income effect of the VAT reduction,while the VAT reduction has no significant impact on the commodity price index,and the substitution effect has not been verified;Fourth,the further study of consumption upgrading found that the VAT reduction mainly affected the consumption structure,consumption quality and consumption quantity of residents,but had no significant impact on consumption propensity.Therefore,this paper puts forward four suggestions for reference: first,further promote the reduction of value-added tax and promote the increase of residents’ income;Second,optimize the value-added tax reduction measures in economically backward areas;Third,improve the quality of consumer goods at the supply end and promote the upgrading of residents’ consumption;Fourth,strengthen people’s livelihood and consumer confidence.This provides a reference for the current high-quality economic development,the response to the complex situation at home and abroad and the reform of value-added tax reduction.