What role will tax cuts play in stimulating economic growth?

In the economic situation of "stable but changing", reducing the tax burden of economic entities will help all entities to fully release their operating vitality.

From a theoretical point of view, if the corporate income tax rate is reduced, the corporate savings rate will increase, liquidity will increase, and the investment rate will also increase. Reducing corporate income tax is actually a liquidity relief to improve the production capacity of China's hundreds of millions of economic entities. If the scale of the economy increases and the tax rate decreases but the tax base expands, the total tax revenue may not decrease but increase.

Reducing the corporate income tax rate can promote corporate destocking and deleveraging, while lowering leverage and reducing triangular debt can increase corporate liquidity and promote enhanced liquidity in the currency secondary market and capital secondary market. As a result, the market can become more prosperous in terms of both buying and selling.

The efficiency of China's economy will be significantly improved, and the economic system will also transform from the original investment-driven model to a demand-driven and innovation-driven model, thereby promoting an increase in per capita income and helping the country's economy maintain relatively high growth. .

Extended information:

Important measures:

On August 30, 2018, Premier Li Keqiang chaired an executive meeting of the State Council and decided to launch new measures to support entities economic development. Reducing taxes and fees is an important measure to implement proactive fiscal policies and maintain macroeconomic stability and improvement.

1. Provide property tax and urban land use tax reduction and exemption to enterprises that have stopped production and business due to policies such as overcapacity reduction and structural adjustment, tax reduction and exemption for investment businesses related to social security funds and basic pension insurance funds, and tax reductions and exemptions for agriculture-related enterprises. Postal Savings Bank with large loan volume is allowed to choose the simple tax calculation method to pay value-added tax at the rate of 3 on the interest income from agricultural-related loans.

2. In order to encourage an increase in loans to small and micro enterprises, from September 1, 2018 to the end of 2020, the interest income from loans to qualified small and micro enterprises and individual industrial and commercial households will be exempted from the VAT limit on the credit limit of a single household. , further increased from the previously determined 5 million yuan to 10 million yuan.

3. In order to promote a higher level of opening up to the outside world and encourage and attract foreign capital to participate in domestic economic development, the bond interest income obtained by overseas institutions investing in the domestic bond market is temporarily exempt from corporate income tax and value-added tax. The policy period It is tentatively scheduled for three years to improve the export tax rebate rate for some products.

Baidu Encyclopedia-Tax Reduction