Residents’ income distribution effect of business tax replaced with VAT reform—based on CGE model

Changnan Chen, Zhifang Su and Wenjun Shuai

Economic Research-Ekonomska Istraživanja, 2022, vol. 35, issue 1, 2793-2808

Abstract: 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.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1331677X.2021.1980732 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:reroxx:v:35:y:2022:i:1:p:2793-2808

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rero20

DOI: 10.1080/1331677X.2021.1980732

Access Statistics for this article

Economic Research-Ekonomska Istraživanja is currently edited by Marinko Skare

More articles in Economic Research-Ekonomska Istraživanja from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().