Taxation reforms and changes in revenue assignments in China
Ahmad, Ehtisham, Singh, Raju and Lockwood, Ben (2004) Taxation reforms and changes in revenue assignments in China. Working Paper. International Monetary Fund. (International Monetary Fund (Fiscal Affairs Department) Working Paper).
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The value-added tax (VAT) in China has the unusual feature that capital goods are included in the VAT base. In addition, most services are subject to the business tax, which is not creditable against VAT, but which accrues to local governments, and operates as a turnover tax. On grounds of economic efficiency, it would be desirable to eliminate these distortions so that domestic producers are not increasingly placed at a disadvantage as China dismantles tariff and nontariff barriers on competing goods. Reforming indirect taxation would however generate considerable revenue losses for local governments and, in the absence of any compensatory mechanisms, there would be significant impediments to the needed reforms. This paper focuses on the extent of revenue losses, their distribution across provinces, and possible options for compensation.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HC Economic History and Conditions
D History General and Old World > DS Asia
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||China -- Economic policy, Indirect taxation -- China, Value-added tax -- China|
|Series Name:||International Monetary Fund (Fiscal Affairs Department) Working Paper|
|Publisher:||International Monetary Fund|
|Number of Pages:||26|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
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