Tax Burden of Urban and Rural Residents:Fiscal Incidence Analysis
Although China has historically eliminated absolute poverty and completed the building of a moderately prosperous so-ciety in all respects,the urban-rural dual structure is still prominent.Not only is the income of rural residents significantly lower than that of urban residents,but most of the low-income people are distributed in rural areas.In this case,who bears a heavier tax burden,urban or rural residents?Does the tax system play a role in regulating the income gap between urban and rural residents?This is an important issue to be studied for China to achieve common prosperity.Intuitively,rural residents seem to pay little tax,especially since the abolition of agricultural taxes on January 1,2006.But this idea ignores the important fact that in addition to paying direct taxes,rural residents also have to bear indirect taxes.The large amount of indirect taxes bome by rural residents in the process of production activities and consumption may not be less than that of urban residents.For this reason,the existing literature on the tax burden comparison of urban and rural residents also mainly measures and compares the indirect tax burden.Most of these studies adopt the micro simulation method and calculate based on the"forward transfer"assumption of indirect tax.It is generally found that the indirect tax burden of rural residents is higher than that of urban residents.However,there are still several important questions to be further studied:firstly,how is the distribution mechanism of the indirect tax burden between urban and rural residents;secondly,how is the adjustment effect of personal income tax on the tax burden gap between urban and rural residents;thirdly,how is the effect of fiscal transfer expenditure on the fair tax burden of urban and rural residents;fourthly,what kind of plan is more conducive to the narrowing of the urban-rural income gap.Therefore,this paper specifically calculates the indirect tax burden,total tax burden and net tax burden of urban and rural residents,and seeks the answer to the above questions by combining the policy simulation effect.Based on the CGE model con-structed by the general equilibrium theory,this paper calculates the tax burden of urban and rural residents in China from 2002 to 2018.The results show that the tax burden of rural residents is higher than that of urban residents,and the tax burden gap be-tween them needs to be adjusted urgently.It is found that under the current tax system in China,indirect tax is not only the main source of tax burden for residents but also the main factor causing the heavier tax burden for rural residents than the urban resi-dents;direct tax(mainly personal income tax)helps to narrow the gap between urban and rural residents,but the effect is limited;the fiscal transfer expenditure is more"biased"to the urban residents,which will widen the gap.The tax burden gap between ur-ban and rural residents is still expanding.It shows that China's current income redistribution policy still exhibits the phenomenon of"taking more and giving less"for rural residents.On the basis of the calculation results of tax burden,this paper assumes three reform plans to adjust the tax burden gap and simulates the effect of the plans.The results show that the tax structure adjustment of reducing the indirect tax burden and increas-ing the direct tax burden,increasing the transfer expenditure to rural residents,and improving the total factor productivity of the ag-ricultural sector can effectively reduce the tax burden of rural residents and narrow the tax burden gap between urban and rural residents.However,the three plans have their own advantages and disadvantages.In order to give consideration to the economic efficiency and the fairness of the tax burden of urban and rural residents,policy coordination is needed.Finally,this paper tries to make some operational policy suggestions.First,we should reduce the burden of indirect tax and weaken the regressive nature of indirect tax.Second,we should increase the proportion of direct tax and improve the personal in-come tax system.Third,we should adjust the structure of transfer expenditure and increase the transfer expenditure to rural resi-dents.Fourth,we should increase agricultural total factor productivity and optimize the income structure of rural residents.