Fan Zhai (Asian Development Bank, 6 ADB Avenue, Mandaluyong City, 1550 MM, Philippines,) Jianwu He (Development Research Center of the State Council, P.R. China, 225 Chaoyangmen Nei Street Beijing, 100010, P. R. China,)
Additional information is available for the following
registered author(s):
The People's Republic of China (PRC) has now decided to shift its value-added tax (VAT) from production-based to consumption-based. This transition is currently piloted in the three provinces of the northeast PRC, and is expected to be extended to the whole country in the coming 2 or 3 years. Using a two-region dynamic general equilibrium model with overlapping generations, this paper investigates the macroeconomic and welfare effects of the VAT transition in PRC. The distribution effects between generations are also analyzed to get a sense of public opinion toward the reform. We put special emphasis on the pace of reform by analyzing the pre-announcement effects and the inter-regional impacts of tax reform that began in one pilot region. The simulation results suggest large welfare gains from the VAT transition. However, the pilot reform in the northeast provinces, which delays the national implementation of consumption-based VAT, would involve substantial transitional costs for the rest of the PRC. (c) 2008 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Did you know? Citation analysis on IDEAS includes online papers that are freely accessible and whose text could be automatically analyzed, currently about 210000 papers.