Abstract: This paper, on the basis of drawing experiences from foreign countries, analyses the construction of China’s sub-national tax system after the fade-out of business tax, and points out that neither property tax nor corporation income tax is the appropriate main tax for sub-national governments, and moreover, the share of value-added tax for the sub-national governments should not be increased. The paper suggests that the central government enacts sales tax for sub-national governments, or reforms excise tax by allocating the lump sum part of it to the sub-national governments. In addition, the weight of individual income tax shared by the sub-national government might be raised. It argues that the revenue of VAT should not be shared between the central and sub-national governments, but be exclusively assigned to the central government; meanwhile, the central government should further enlarge the general grants to sub-national governments.
Key words: Turning Business Tax into VAT, Sub-national Taxes, Tax-sharing System
source:Finance & Trade Economics ,No5,2014