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China: How Can Revenue Reforms Contribute to Inclusive and Sustainable Growth?
Author:
Mr. Waikei R Lam
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and
Mr. Philippe Wingender
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Series:
IMF Working Papers
Volume/Issue:
Volume 2015: Issue 066
Language:
English
Publication Date:
24 Mar 2015
DOI:
https://doi.org/10.5089/9781475531138.001
ISBN:
9781475531138
ISSN:
1018-5941
Pages:
30
Keywords:
WP; revenue; reform; revenue reform; tax revenue; Fiscal Policy; China; tax reforms; government debt; social security; business operation tax; spending responsibility; tax schedule; tax sharing; social security contribution rate; revenue objective; reform policy; Social security contributions; Income; Income and capital gains taxes; Asia and Pacific; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Revenue reforms can contribute to more inclusive, green, and sustainable growth in China. Relative to OECD economies, fiscal policy in China is less redistributive. Options for promoting more inclusive growth include improving the progressivity of labor taxes (individual income tax and social security contributions), introducing a recurrent property tax, and finishing the transition to a comprehensive value-added tax. Higher environmental taxes, meanwhile, would promote more environment-friendly economy. These reforms could also significantly boost revenue, potentially by as much as 6½ percent of GDP. Such increases in revenue could help reduce the deficit, finance priority social and infrastructure spending, and offset cuts in other taxes. We illustrate how these revenue reforms could be part of a comprehensive fiscal package that achieves the needed consolidation in the (augmented) deficit and foster higher quality growth.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund