IDEAS home Printed from https://ideas.repec.org/a/taf/reroxx/v35y2022i1p2793-2808.html
   My bibliography  Save this article

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

Author

Listed:
  • Changnan Chen
  • Zhifang Su
  • Wenjun Shuai

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.

Suggested Citation

  • Changnan Chen & Zhifang Su & Wenjun Shuai, 2022. "Residents’ income distribution effect of business tax replaced with VAT reform—based on CGE model," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 2793-2808, December.
  • Handle: RePEc:taf:reroxx:v:35:y:2022:i:1:p:2793-2808
    DOI: 10.1080/1331677X.2021.1980732
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1331677X.2021.1980732
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/1331677X.2021.1980732?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:reroxx:v:35:y:2022:i:1:p:2793-2808. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rero .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.