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Impact of the VAT reduction policy on local fiscal pressure in China in light of the COVID-19 pandemic: A measurement based on a computable general equilibrium model

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  • Guo, Yue Mei
  • Shi, Yun Rui

Abstract

Value added tax (VAT) reduction is an important tool for cultivating new driving forces for economic development, and it has had a notable impact on local fiscal pressure. Taking the 2018–2019 VAT rate reduction in China as an example, this paper uses a CGE model to estimate the impact of the VAT reduction policy on local fiscal pressure in China in light of the COVID-19 pandemic. The results show that local fiscal pressure increased from 0.342 to 0.435, an increase of 27.08%. The study provides policy implications on optimizing tax structure and alleviating local fiscal pressure.

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  • Guo, Yue Mei & Shi, Yun Rui, 2021. "Impact of the VAT reduction policy on local fiscal pressure in China in light of the COVID-19 pandemic: A measurement based on a computable general equilibrium model," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 253-264.
    • Handle: RePEc:eee:ecanpo:v:69:y:2021:i:c:p:253-264
    DOI: 10.1016/j.eap.2020.12.010
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    8. Suleman Sarwar & Dalia Streimikiene & Rida Waheed & Ashwag Dignah & Asta Mikalauskiene, 2021. "Does the Vision 2030 and Value Added Tax Leads to Sustainable Economic Growth: The Case of Saudi Arabia?," Sustainability, MDPI, vol. 13(19), pages 1-20, October.
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