Financial Crisis and the Revival of Indirect Taxes in the Developed Country

Abstract

In a globalized era, in order to fight for capital and location of company construction, a number of countries have reduced direct taxes on companies one by one, including business income tax, capital tax, social security tax afforded by company, etc. Due to the inflexibility of financial expenditure, it causes financial crisis in developed countries. Aimed at compensating the shortage resulted from reduction of direct tax, countries have been forced to expand VAT and consumption tax, since these taxes have a lower cost and a better security effect on financial income. As a consequence, the proportion of indirect taxes rises again, which reverts the former taxation development trend. In the future, the proportion of indirect taxes in China will decrease, but we shouldn’t follow the American taxation structure as an example. In conclusion, indirect taxes, mainly represented by VAT and consumption tax, will still play an important role in China.