| THE OECD has released a Paper
that compares
the tax system in China with the tax system in OECD countries and the tax
reforms China and OECD countries have implemented in the past. The analysis
focuses on those taxes and tax issues which are currently on China’s reform
agenda, including the consumption taxes (especially the integration of the "business tax" into
the VAT), environmentally-related taxes, the personal income tax, fiscal
relations between the central and sub-central levels of government and property
taxes.
The
paper provides a (preliminary) analysis of the tax-to-GDP ratio and the tax
mix in China as well as the average and marginal tax wedge on labour income,
by applying the OECD’s Revenue Statistics and Taxing Wages methodology. Although
a country’s culture, traditions and legal system play an important part in
shaping its tax regime and how it can be reformed, the paper also reviews
the general design issues on how to make the tax system in China more growth-friendly,
simple and transparent, less distortive and fairer. The paper contains a
detailed discussion and evaluation of each tax and considers possible directions
for future tax reform in China.
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