DRIVING ECONOMIC PROGRESS: THE PATH TO TAXATION RESTRUCTURING
Authors: Zhao Ming, Wei Zhang
Published: June 2024
Abstract
<p>This study investigates the vital role of a country's tax structure in influencing economic growth, with a focus on the tax systems in China and the member countries of the Organization for Economic Co-operation and Development (OECD). It is widely acknowledged that a country's economic foundation and policy objectives shape the distinct types of tax structures adopted. These tax structures can be categorized into three main types: those primarily reliant on indirect taxes, those centered around direct taxes, and those incorporating both direct and indirect taxes. China's tax structure has evolved significantly since the reform of the tax-sharing system in 1994, transitioning to a model where indirect taxes play a dominant role, while direct taxes serve as supplementary revenue sources. However, as China undergoes rapid economic development, the limitations of this tax structure have become increasingly evident. Low-income individuals tend to bear a disproportionate burden of indirect taxes, hindering the structure's ability to effectively address income distribution issues and leading to regressive tax burdens. To enhance the quality of economic growth and navigate its shift from a "quantity"-driven economy to a "quality"-focused one, China needs to urgently optimize its tax system structure. This study is essential in the context of the 19th National Congress of the Communist Party of China's recognition of the importance of a robust fiscal and taxation system in fostering sustainable economic growth and enhancing economic quality. Examining the tax structures of OECD countries offers valuable insights for improving China's modern financial and taxation system.</p>
Full Text
No full text available
Cite this Article
References
- No references available.