Residents’ income distribution effect of business tax replaced with VAT reform—based on CGE model

Figures & data

Table 1. VAT reform effect on residents’ indirect tax burden.

Groups	Before VAT reform (1)	Pilot VAT reform (2)	Comprehensive VAT reform (3)	(2)–(1)	(3)–(1)
hhr1	6.46%	5.94%	4.27%	−0.52%	−2.19%
hhr2	6.50%	5.98%	4.29%	−0.52%	−2.22%
hhr3	6.63%	6.10%	4.35%	−0.53%	−2.28%
hhr4	6.73%	6.20%	4.39%	−0.53%	−2.34%
hhr5	6.86%	6.30%	4.46%	−0.56%	−2.40%
hhu1	7.09%	6.57%	4.31%	−0.52%	−2.77%
hhu2	7.15%	6.59%	4.41%	−0.55%	−2.74%
hhu3	7.18%	6.61%	4.46%	−0.57%	−2.72%
hhu4	7.24%	6.64%	4.51%	−0.60%	−2.73%
hhu5	7.34%	6.73%	4.57%	−0.61%	−2.78%
hhu6	7.41%	6.78%	4.60%	−0.63%	−2.81%
hhu7	7.57%	6.93%	4.65%	−0.64%	−2.92%
Rural	6.67%	6.14%	4.37%	−0.53%	−2.30%
Urban	7.33%	6.73%	4.54%	−0.60%	−2.79%
National	7.18%	6.59%	4.50%	−0.59%	−2.68%

Source: Author’s calculations.

Table 2. VAT reform effect on residents’ income.

Pilot VAT reform		Comprehensive VAT reform
Groups	Income change	Groups	Income change
hhr1	0.28%	hhr1	2.37%
hhr2	0.06%	hhr2	1.88%
hhr3	−0.01%	hhr3	1.73%
hhr4	−0.05%	hhr4	1.62%
hhr5	0.01%	hhr5	1.61%
hhu1	−0.44%	hhu1	0.71%
hhu2	−0.45%	hhu2	0.70%
hhu3	−0.45%	hhu3	0.69%
hhu4	−0.45%	hhu4	0.66%
hhu5	−0.44%	hhu5	0.65%
hhu6	−0.43%	hhu6	0.65%
hhu7	−0.38%	hhu7	0.67%
Rural	0.02%	Rural	1.72%
Urban	−0.43%	Urban	0.67%
National	−0.34%	National	0.87%

Source: Author’s calculations.

Table 3. VAR reform effect on residents’ income distribution.

Groups	Indicators	Before VAT reform	Pilot VAT reform		Comprehensive VAT reform
Rural	MT index	−0.003703	−0.003402		−0.002444
	HE	0	0		0
	VE	−0.003703	−0.003402		−0.002444
	K	−0.077152	−0.077318		−0.078998
	t	0.045803	0.042144		0.030007
Urban	MT index	−0.001157	−0.001093		−0.000711
	HE	0	0		0
	VE	−0.001157	−0.001093		−0.000711
	K	−0.026575	−0.027452		−0.026816
	t	0.041737	0.038296		0.025845
National	MT index	−0.001437	−0.001345		−0.001011
	HE	0	0		0
	VE	−0.001437	−0.001345		−0.001011
	K	−0.032357	−0.033081		−0.036914
	t	0.042536	0.039055		0.026669

Source: Author’s calculations.

Table 4. VAT reform effect on residents’ welfare.

Pilot VAT reform			Comprehensive VAT reform
Groups	EV	CV	Groups	EV	CV
hhr1	54.77	54.32	hhr1	315.57	306.18
hhr2	45.67	45.29	hhr2	322.24	312.65
hhr3	47.55	47.16	hhr3	360.02	349.31
hhr4	51.28	50.86	hhr4	413.23	400.94
hhr5	78.02	77.38	hhr5	546.02	529.78
hhu1	8.20	8.12	hhu1	279.43	271.44
hhu2	12.90	12.78	hhu2	348.22	338.27
hhu3	36.04	35.71	hhu3	822.54	799.04
hhu4	50.37	49.90	hhu4	983.24	955.14
hhu5	70.81	70.15	hhu5	1229.13	1194.01
hhu6	51.00	50.53	hhu6	790.23	767.65
hhu7	97.01	96.11	hhu7	1205.13	1170.69
Rural	55.46	55.00	Rural	391.41	379.77
Urban	48.35	47.91	Urban	869.28	844.44
National	51.72	51.27	National	642.63	624.05

Source: Author’s calculations.