WANG Ying, etc:An Empirical Research on the Value-added Tax and Expansionof the Size of Government

Abstract：Value-added tax represents the most prominent achievement in more than half a century of the development of tax policy and tax collection and management.Having the most important status in our country's taxation system and the largest contribution to revenue, value-added tax reform has never stopped.From government expansion perspective, this paper attempts to study the relationship between the value-added tax and expansion of the size of government in the condition of both raised and invariant tax rate in Europe and China respectively.The empirical results showed that the value-added tax is one of the important factors causing the expansion of the size of government.In the process of promoting the value-added tax reform, China should not only appreciate its income effect and the expected effect of economic transformation, but also need to guard against its boost effect to the expansion of the size of government.The follow-up reform depends on the trade-off between economic interests and political interests, and the game of interest among government, enterprises and the public.

Key words： Value-added Tax   Size of Government   Tax Rate   Expansion

source:Finance & Trade Economics ,No.11,2014