China's value-added tax transformation on the impact on economic development

[Abstract] VAT is one of the main taxes in revenue in the country account for a large proportion. Value-added tax has the effect of stimulating Investment, help to optimize industrial structure, but there are also potential future Investment in over-expansion.

[Keywords] tax, restructuring and economic development

In September 2004 the first trial in Northeast China VAT reform is a consumption-type VAT is the best choice for our value-added type, has long been a theory of industry experts and scholars debate. Value-added tax on economic development zone to what kind of impact, there are different opinions. a view that the VAT revenue in China will have some degree of negative impact, value-added tax transformation on the second view is that companies will have a significant impact due to each observation point and the focus is different, so differences of opinion is completely natural, but can still be seen, regardless of point of view, everyone's long-term positive impact on the value-added tax are taking a positive attitude, which is the most basic is the greatest benefit.

1 VAT on the overall impact of economic development
Sustainable development of the national economy is based primarily on two: First, to maintain appropriate economic growth, and second, the price level is stable.

VAT reform, maintaining the current tax rates remain unchanged under the premise is a major tax cuts would be consumption-type VAT into a production-type VAT help eliminate China's current production-type VAT system in the double taxation of factors , the real business Investment in equipment to reduce the tax burden will help to encourage Investment and expansion of domestic demand, promote technological progress, industrial structure adjustment and economic growth pattern is currently under the influence of the financial crisis, global economic growth is slowing down the momentum, Some countries even signs of economic recession, the financial crisis on the real economy is adversely affected in this situation, the introduction of the VAT reform, for enhancing the capacity for sustained development, enhance our competitiveness, to overcome the global financial crisis on China adverse economic impact on a very important role.

2 Value-added tax on the revenue impact of
The VAT, in the short term will inevitably arise between central and local revenue reduction, but from the long-term impact and need to see a balanced development of China's macroeconomic, financial reduction of this undoubtedly is the equivalent of our government into the business a lot of cash flow, encourage use of new technologies, promote the development of basic industries, to fundamentally change our long-standing technological backwardness and the status of irrational industrial structure, value-added tax to be overwhelmed by the role, may be a number of years After receiving significant results. the long term, value-added tax restructuring due to the growth of Investment and economic growth, along with the total tax revenue will lead to a gradual increase in VAT, the positive effects will eventually be greater than negative effects.

3 Value-added tax to promote Investment analysis
(1) consumption-based value-added tax to promote Investment growth, a significant effect. The data show that the gross domestic product, the statutory tax rate, exactly the same amount of increased Investment in the case, because the type of value-added tax is not the same, resulting in the actual tax burden is not the same. implementation of the VAT, will play a structural effect of tax cuts, the impact will reduce the company's actual tax burden, promote business Investment and household consumption, increase economic vitality. By comparison, under the consumption-type VAT , then the greater the amount of increased Investment, the lower the ratio of the actual tax burden, less investment, the higher the ratio of the actual tax burden. investment to increase the actual tax burden of the VAT impact is obvious and we can be seen as investment changes, the actual tax burden of different companies, thus affecting the investment behavior of enterprises, the increase in investment spending multiplier effect of the theory of economic growth to emerge.

But there are still some experts and scholars believe that companies investing in practice depends on the marginal benefit of investment in value-added tax after the tax reduction is only one of the factors investors take into account additional, not the determining factor, they believe in market economy conditions , the investment depends largely on market supply and demand of goods and merchandise margin. value-added tax transformation on the role of investment promotion is a relatively long-term trend, it is by expanding the company's future earnings and investment costs of space, by the transition to reduce the tax burden generated by this interest is greater than the investment costs, affect the current or future cash flows, and to motivate enterprises to increase investment.

(2) Value-added tax will help optimize the industrial structure in the value-added tax transformation, both to encourage the enterprises to increase investment demand is also beneficial to different regions and fair competition among enterprises and industrial structure optimization. The use of consumption-type VAT, the original small proportion of fixed assets of the industry's actual tax burden low advantage will disappear, while the basic industries and capital-intensive enterprises, the proportion of its fixed assets, as opposed to processing industrial and labor-intensive enterprises, the transition will be more beneficial to them. This has prompted the tax burden among enterprises in different industries and changes occur to some extent, this change in the promotion of basic industries and capital-intensive business development, while also will facilitate the technological advances and equipment updates. tax structure will accelerate the re-adjustment of industrial structure adjustment and industrial development between different regions, it is entirely in line with national industrial policy direction. In addition, to stimulate investment in the west, narrowing the economic disparities between regions, to support the implementation of western development strategy, others have an important role. Links to free download http://www.hi138.com
4 after the transformation VAT problems
(1) value-added tax issues. First, the narrow range of value-added tax as the relevant deduction chain is incomplete, its inherent checks and balances mechanism is not fully effective play accordance with the basic principles of value-added tax, value-added You can have multiple tax levy, tax not re-sign, a chain, the characteristics of a fair tax burden if the product from the inputs, outputs, switching to full implementation of all aspects of final consumption tax, like a chain, one link and one, a complete and rigorous, value-added tax to promote internal control mechanism between upstream and downstream will be able to fully play its role. China's current VAT only in the two industrial production and circulation of commodities is levied, with industrial and commercial relations are very close transportation and construction and installation and other areas continue to impose sales tax, value-added tax deduction resulting in the chain may break, weaken the role of the internal control mechanism. the same is not conducive to a fair tax burden between these industries and fair competition.

Second, with economic development, deepen the reform of corporate diversification, our value-added tax and sales tax policy is difficult to distinguish the boundary coupled with the frequent international exchanges among economic activities, business activities or behavior become increasingly complex, value-added tax and sales tax behavior policy imposed on the boundaries of some particularly vague, subjective human judgments and choices more and more. For example, to distinguish the mixed sales activities and sideline behavior, value-added sales practices and business tax mix mixed sales behavior.

The VAT reform in China, is the perfect value-added tax system, a major step, but even still further improved. I think we should consider expanding the scope of value-added tax, VAT will be more trade into, because VAT is a tax based on value added tax, VAT and taxes to be levied a wide range of unity to ensure the fairness of the tax burden on the industry from the international scope of value-added tax in some countries, most countries adopt VAT is more thorough. China should learn from international experience combined with China's actual situation, the appropriate expansion of the scope of value-added tax, or at least should include closely related with industrial and commercial transportation, construction and installation industry and other industries, so that on ensuring the integrity of the chain of VAT deduction, VAT's internal control mechanism has also been fully exploited. while value-added solutions have transformed the problem of declining revenue, will help stabilize state revenue.

(2) value-added tax has the potential problem of over-expansion of investment in the future. Investment from China's actual situation, large-scale investment in China has long been mainly caused by the investment system, that investors, especially state-owned investors and there is no perfect investment constraints in theory, inhibit the production of capital gains tax investment, but this occurred before the VAT blind construction, duplication and other phenomena in our economic life also abound. The fact that, if not strengthen investment constraints, even if the type does not change there will be a lot of value-added tax the case of the blind expansion of investment. the restructuring, the objective will greatly stimulate the demand for investment, but to solve the problem of excessive investment scale, but also need to rely on other areas of reform, the investment constraint mechanism, can strengthen the budget for new investors management to promote enterprise in the direction of investment and more cautious on the investment scale, so the value-added tax, the need to reform the investment system, strengthen the budget constraints, constraints and risk controls to build a rational system to ensure the effectiveness of investment, reduce blindness . Links to free download http://www.hi138.com