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China

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China

How Can Revenue Reforms Contribute to Inclusive and Sustainable Growth?

IMF,

5 min read
5 take-aways
Audio & text

What's inside?

The fiscal reforms China undertakes now will have significant implications for its future.

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Editorial Rating

7

Qualities

  • Analytical
  • Innovative
  • Background

Recommendation

China’s inefficient, regressive tax system hampers the country’s development and reform efforts. With its economy running out of steam, China will have to stoke its productivity and growth engines through fair and sustainable fiscal policies. This timely report from International Monetary Fund economists W. Raphael Lam and Philippe Wingender outlines how specific changes could raise tax revenues to pay for China’s growing social and environmental needs. getAbstract recommends this sensible study to executives, policy makers and China watchers.

Summary

In late 2013, China proposed a wide-ranging reform program that includes a redesign of its fiscal policy to promote a fairer, steadier and greener economy. China’s current tax system depends on indirect taxes on goods and services, while direct taxes on personal or corporate income make up a small share of tax receipts, relative to OECD nations. Though China imposes less of a burden on its citizens and businesses than the OECD average, low-income earners pay taxes at a much higher effective rate than high-income earners do. Local governments tend to fund gaps in receipts from nontax revenues such as fees, fines and income ...

About the Authors

W. Raphael Lam and Philippe Wingender are economists at the International Monetary Fund.

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