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Taxation Reforms and Changes in Revenue Assignments in China
Author:
Mr. Raju J Singh
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,
Mr. Ben Lockwoodnull

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Mr. Ehtisham Ahmad
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Series:
IMF Working Papers
Volume/Issue:
Volume 2004: Issue 125
Language:
English
Publication Date:
01 Jul 2004
DOI:
https://doi.org/10.5089/9781451854855.001
ISBN:
9781451854855
ISSN:
1018-5941
Pages:
25
Keywords:
WP; VAT revenue; tax revenue; business tax; revenue-returned formula; Fiscal Policy; Indirect Taxation; Intergovernmental Fiscal Relations; China; base scenario; VAT base; Value-added tax; Consumption taxes; Corporate income tax; Tax efficiency
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2004: Issue 125