Can Increasing the Proportion of Direct Tax Pull the Household Consumption?
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| Title | Can Increasing the Proportion of Direct Tax Pull the Household Consumption?
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| Author | Deng Ziji , Xi Tian and Wang Yanwu |
| Organization | Xiamen University |
| Email | tiantian8509@126.com；shequgongming@yahoo.cn |
| Key Words | Direct tax; Indirect tax; Tax burden; Tax structure; Household consumption |
| Abstract | This paper using a simple dynamic general equilibrium model by setting the parameters of the tax structure and levels of tax burden, simulated effects that the changes of proportion of direct tax had on household consumption under different levels of tax burden. The results showed that compared with the effects that tax burden had on household consumption, the adjustment of the tax structure has less effects on household consumption and if a rise in the proportion of direct tax will lead to the increase of tax burden, then the rises of proportion of direct tax will be difficult to make up the negative effects that tax burden increased has on the household consumption. Subsequently, we did an empirical test using China’s macroeconomic data and confirmed the conclusion of the simulation. We believe that in order to raise household consumption by increasing the proportion of direct taxes, not increasing the tax burden need to be a prerequisite and reducing the indirect tax revenue should be the first step in the reform of the tax structure. |
| Serial Number | WP356 |
| Time | 2012-09-07 |
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