Abstract
In view of the objective reality that the market prices stay high in recent years, inflation which continues to rise is not effectively inhibited, combined with the previous economic circles who attributed the reasons to inflation for commodity supply and demand, the issuance of money and neglect the role of tax factors led to national governance inflation decision-making that is limited by the phenomenon. By means of comparative analysis, Granger causality analysis and Augmented Dickey-Fuller test, we dissect the external disturbance and endogenous factors of influencing inflation, select the 2001-2016 tax index and CPI index and make an empirical research of the interference from government taxation to price and inflation trends and strength. It is approved there is single causal relationship between tax and price rising, and sums up that government taxation can promote inflation, but inflation can’t lead to tax rising. Of course, this conclusion can also provide theoretical support for national governance of inflation.
Highlights
Over the years, the international and domestic academic theorists have argued that taxation is the cost factor that leads to rising prices, but have ignored the objective facts that the price tax has no affect on the cost but can lead to rising prices and cause inflation [1]
In view of the objective reality that the market prices stay high in recent years, inflation which continues to rise is not effectively inhibited, combined with the previous economic circles who attributed the reasons to inflation for commodity supply and demand, the issuance of money and neglect the role of tax factors led to national governance inflation decision-making that is limited by the phenomenon
Economists generally believe that the market price deviates from the commodity value and government additional currency is the most important external factors leading to inflation [3]
Summary
The international and domestic academic theorists have argued that taxation is the cost factor that leads to rising prices, but have ignored the objective facts that the price tax has no affect on the cost but can lead to rising prices and cause inflation [1]. People did not reveal tax as a direct element of price or some ideological concerns that affected the decision-making ideas of the country to curb prices and govern inflation through the taxation. Because of this, it has damaged the government’s economic prestige. Some scholars believe that the rising prices are the important reason to promoting tax revenue growth [2]. When the inflation is caused by the supply and demand changes and the government’s issuance of money emerges, the tax can become an important means to regulate the price of goods and services and control inflation
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