Indirect Tax Burden of Regional Residents: Study on Long Term MRIO Model

Abstract

AbstractInvestigating the indirect tax burden of residents is an important way of understanding the effect of tax on income distribution and the tax burden transfer. In this paper, a long term MRIO model is constructed by using the regional input-output tables in China. We simulate the flow of value-added tax, consumption tax and business tax in different departments of 30 provinces (except Tibet) in mainland China from the perspective of rows in the IO table, we obtain the real burden of three indirect taxes on urban residents, and discuss the transfer of tax burden among regions. The conclusions are as follows: There are large differences in tax burden among regions. The real tax burden shifted from the eastern region to the middle and the western regions. Indirect tax aggravates the income inequality of urban residents in different regions. The indirect tax in China has a certain degree of regression. Based on the empirical analysis, we think the government should make the following policy changes: 1) Giving more consideration to the consumption terminals; 2) Adjusting preferential policies of regional taxation; 3) Increasing the amount of preferential policies for the western region.