Scientific Understanding Of The Relationship Between Tax Growth And GDP Growth

Tax growth rate is the result of many factors. There is no direct or quantitative relationship between tax growth and GDP growth.

At different stages of economic development, the growth rate of taxes may be higher than the growth rate of GDP, or may be lower than the growth rate of GDP.

Because of the complexity and variability of human economic activities and the flexibility of the government's macro policies, it is inevitable for tax and GDP growth to be out of sync, and the simultaneous growth of taxes and GDP is a subjective assumption.

Since the reform of tax system in 1994, China's tax revenue has been growing steadily and rapidly, and the national financial strength has been significantly enhanced.

From the 1994 -2007 GDP and tax comparison (see Annex), tax growth does not keep pace with the growth of GDP.

In most years, the growth rate of tax is faster than the growth rate of GDP, but in some years, the growth rate of tax is slower than that of GDP (hereinafter referred to as the growth rate of GDP).

For example, in 1994, the tax growth rate of -1996 was lower than that of GDP, while the growth rate of -2007 tax in 2000 was higher than that of GDP.

We believe that there is no direct and quantitative correspondence between the growth rate of GDP and the growth rate of tax revenue. The two factors can not be compared simply. The factors that affect tax revenue are various.

Economic growth is the basis of tax growth, but the most important factor affecting the growth of tax revenue is the growth of the corresponding tax base.

Because the growth rate of GDP is not consistent with the tax base of each tax category, the growth of GDP is not positively related to tax growth under any conditions.

Specifically, taxes based on sales or sales are generally positively related to GDP, such as value added tax, business tax, consumption tax, urban construction tax and resource tax.

When the economy is in an upward period, GDP grows faster, and the tax base of these taxes generally grows faster. When the economy is in a downward period, the growth rate of GDP slows down, and the growth of the tax base of these taxes will generally slow down.

In addition, some taxes have a certain correlation with GDP, but the correlation is relatively small. For example, corporate income tax, its tax base is the profit of enterprises, which is closely related to the quality of economic development, but the correlation between its growth rate and GDP growth is very small. There are also some taxes that are not closely related to GDP, such as property tax, behavior tax and other taxes, which are closely related to the quantity and behavior of property and so on. There is no direct quantitative relationship with GDP.

When the economic indicators reflecting the tax base of major taxes (such as industrial added value, total retail sales of social consumer goods, pportation, finance and insurance, post and telecommunications, construction industry, cultural and sports industry, entertainment industry and real estate industry), the sales volume of bulk consumer goods such as tobacco, liquor, automobile, refined oil and so on, the growth rate of the growth rate of tax revenue is higher than the growth rate of GDP when the growth rate of bulk consumer goods such as tobacco, wine, automobile and finished products is higher than that of the GDP growth rate. On the contrary, the growth rate of tax revenue will be lower than the growth rate of GDP.

Generally speaking, in the period of economic growth or rapid growth, the economic indicators reflecting the tax base will be faster than the growth of GDP. Correspondingly, the growth rate of Taxation will also be higher than that of GDP. For example, in 1999 -2007, the state's regulatory measures taken to cope with the Asian financial crisis have gradually played a role, and the economy has resumed growth and the growth rate has accelerated year by year. During this period, the growth rate of the main tax categories is higher than that of GDP, and the tax growth rate is also higher than that of the current GDP growth rate.

When the economic growth slows down, the growth rate of the economic indicators reflecting the tax base will be lower than the growth rate of GDP, so that the growth rate of tax revenue is lower than the growth rate of GDP.

For example, in 1994 -1996, the effect of macro-control measures adopted by the state to prevent overheated economy gradually showed that the economic growth rate gradually dropped. During this period, the growth rate of the main tax categories was lower than the growth rate of GDP, and the growth rate of tax revenue was also lower than that of the current GDP.

Since the second half of last year, the national economy has been slowing down. Accordingly, the growth rate of tax revenue has begun to drop sharply. In October, tax revenue began to show a negative growth in 10 years.

In 2009 and the next one or two years, China's economic development will face many challenges. From the point of view of maintaining a stable, coordinated and sustainable development, we initially judged that, compared with the economic growth in 2005 -2007, the national economy will remain at a relatively low speed in the next one to two years.

The tax base of major taxes, such as industrial added value, total retail sales of social goods, sales volume of consumer goods such as tobacco, liquor, motor vehicles, refined oil and so on, business income of financial insurance, real estate and construction industry, business profit, import volume and securities trading volume growth rate will be lower than the GDP growth rate of the same period. The tax reduction policy adopted by the state to ensure growth will also directly affect tax growth, thus making the tax growth from 2 to 3 years in 2009 as low as that in 1994 -1996.

GDP is made up of one or two and three industrial added value. The growth rate of GDP is the average growth rate of one or two and three industries. As the main tax category of China's tax revenue, the turnover tax mainly comes from second and third industries, and the proportion of tax originates from the primary industry is small.

The difference between GDP growth structure and tax source structure results in the fact that the growth of tax revenue does not directly correspond to the growth of GDP.

In recent years, with the adjustment of the economic structure and the acceleration of the industrialization process, the growth of the value added of the two or three industry is generally faster than that of GDP, resulting in the growth of tax revenue faster than the growth of GDP.

When the industrial growth rate is declining, the growth rate of some second industries in the year will be lower than the GDP growth rate, resulting in tax revenue growth below GDP growth.

The growth of GDP reflects the expansion of the total economy and scale. This expansion can be either extensive or low quality, or intensive, high quality.

When the total economic volume remains stable, when the economic quality and the overall efficiency of enterprises increase, the growth rate of income tax which is closely related to the quality of the economy will exceed the GDP growth rate. Otherwise, when the economic quality and the overall efficiency of enterprises decline, the growth rate of income tax revenue will be lower than the growth rate of GDP, and may even decline.

According to the expenditure method (investment, consumption, net export) accounting GDP, there is a big difference between the accounting method of net export and the accounting method of tax revenue.

In the expenditure law, GDP is net exports (exports minus imports), while exports are increased when accounting for GDP, and imports are deducted when accounting for GDP.

In the tax statistics, the import tax (tariff and import link tax) provided by the import amount is added to the total revenue, and the export tax rebate given by the export is less than the total revenue.

During the period of economic prosperity, the international commodity prices rose sharply. On the one hand, the import tax revenue increased. On the other hand, the export tax rebate control measures implemented by the state to alleviate the favorable balance of foreign trade under this circumstance will reduce the export tax rebate, thus making the tax revenue growth of import and export links higher than the GDP growth rate.

At present, the signs of economic recession in the world's major economies are increasingly obvious. The fall in international commodity prices has led to a fall in import taxes. The measures taken by the state to increase export rebate rate for stabilizing exports will result in a massive reduction in tax revenue and a decrease of one liter, so that the tax growth rate of imports and exports is lower than that of GDP.

The adjustment of tax policy, the levy and stop of tax categories will directly lead to changes in tax rate and tax base, which will have a direct impact on income, but this change is not related to the increase or decrease of GDP.

The enhancement of tax collection and management ability and the improvement of tax collection and management level can increase tax revenue under the premise that other factors remain unchanged, so as to raise the tax revenue growth rate.

But this change has nothing to do with the increase or decrease of GDP.

In addition, some factors that affect tax revenue are not related to GDP.

For example, the adjustment of the distribution pattern of national income will affect the income level of enterprises and residents, thereby affecting income tax revenue. This change has nothing to do with GDP. Some progressive or regressive tax categories, as well as differences in tax and GDP statistics, will also lead to inconsistency between tax revenue and GDP growth rate.