Author(s): LIANG Hong-mei, GUO Xiao-Hui, ZHANG Wei-feng, School of Economics, Northwest Normal University
Pages: 161-167
Year: 2016 Issue:  5
Journal: Journal of Lanzhou University(Social Sciences)
Keyword:  economic growth; taxation structure; labor income tax; capital income tax; consumption expenditure tax; factor supply; the panel vector autoregressive model;
Abstract: Taxation is one of the important factors affecting economic growth. Using the panel vector autoregressive model and following the categorization of labor income tax, capital income tax, and consumption expenditure tax, this paper has processed provincial panel data collected from 1995 to 2012 in order to investigate the dynamic impact of taxation structure change on economic growth and to explore its mechanism from the perspective of factor supply. The result shows that: 1) the change of taxation structure plays a positive role in China’s economic growth; 2) the steady increase of the effective tax rate over labor income, capital income and consumption expenditure may turn the taxation structure into the fetter of economic growth. With the promotion of supply-side structural reform in China, the government should actively adjust the structure of taxation system, effectively reduce tax burdens, further release the energy of factor supplies, and improve the level of economic development.