The role of tax regulation on private consumption: An analysis based on China's Tax System Structure

Abstract

Abstract How does tax regulation affect private consumption? We establish an individual consumption model and use provincial-level panel data in China to empirically test the relationship between China's tax system structure and private consumption. The results indicate that China's turnover tax has a inhibitory effect on private onsumption level and consumption structure upgrading, but personal income tax has a promoting effect on private consumption level and consumption structure upgrading, while property tax has the most significant promoting effect on private consumption level and onsumption structure upgrading. Further research suggests that turnover tax and property tax have a significant spatial spillover effect on private consumption structure, and the indirect effect is more obvious than the direct effect. Moreover, the impact of these three types of taxes on China's rural consumption structure is greater than that of urban areas. The research conclusions can provide reference basis for public policy formulation in China and some developing countries.