Using the 2012 input-output table of China, this study constructs a computable general equilibrium model by embedding the value-added tax (VAT) deduction mechanism into the price model and analyses the effect of replacing the business tax with the VAT reform on residents' income distribution. The study shows that the VAT reform is generally conducive to residents' income distribution. Specifically, the VAT reform decreases the indirect tax burden of residents, increases their real income, and narrows down the relative income gap between urban and rural residents. From the perspective of differences between the before-and after-tax Gini coefficients (the MT index), both the pilot VAT reform and VAT reform improve the residents' income distribution. The VAT reform also improves the welfare of households.
K E Y W O R D Sasymmetric degree of China's central fiscal revenue concentration ratio and expenditure concentration ratio, budgetary concentration ratio, full-calibre concentration ratio, international comparison that China's fiscal revenue concentration ratio is too high. Although Li and Shen (2010) and estimate real fiscal revenue concentration ratio, respectively, the former did not consider tax rebates, while the latter did not consider budgetary revenues turned over by the local governments to the central government.Second, as China's fiscal revenue can be measured at budgetary and full-calibre levels, to discuss the question whether fiscal revenue concentration ratio in China is too high, we should not only look at the narrowly budgetary fiscal revenue concentration ratio but also full-calibre fiscal revenue concentration ratio. 3 Therefore, this paper also estimates nominal and real full-calibre fiscal revenue concentration ratios 4 for the years 1998-2016 carefully. As far as we know, and Gao and Yang (2014) also estimated a full-calibre fiscal revenue concentration ratio. Their work provides important references for this paper, but has three limitations. First, the former only considers the government fund revenue, which is not full-calibre fiscal revenue in the strict sense. Although the latter is full-calibre fiscal revenue in the strict sense, the repeated items were not deducted from their estimation results. Second, the estimation was made for a short time period. The former only estimated nominal concentration ratio in 2008, while the latter only estimated concentration ratio in the years 2010-12. Third, both studies only estimated nominal concentration ratio rather than real concentration ratio.Third, based on the estimation of China's full-calibre fiscal revenue concentration ratio, this paper makes a further international comparison. However, compared with the existing international comparison literature (Fang, 2012;Zhao & Guo, 2005), it makes the following two improvements. First, it chooses all the data available in the GFS (Government Financial Statistic) database as a sample for international comparisons to avoid sample selection bias. Second, it uses more rigorous full-calibre fiscal revenue concentration ratio for international comparison.Based on the above estimation results, this paper finds five stylised facts and expresses serious doubts about the statement that fiscal revenue concentration ratio in China is too high. First, budgetary fiscal revenue concentration ratio in China has been greatly overestimated by the nominal concentration ratio. Second, although the budgetary nominal concentration ratio after tax-sharing reform was much higher than the nominal concentration ratio during the periods 1990-93, the budgetary real concentration ratio was significantly lower than the previous period. Third, both the nominal and real fiscal concentration ratios after 2007 show a significant downward trend. Fourth, from an international comparative perspective, no matter what dimension of con...
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