In the aftermath of 2008 financial crisis, many Chinese small enterprises encounter lots of hardship and challenge. In fact, in China tax keep increasing that put countless pressure and burden of those small enterprises. In order to release their pain and stress, Chinese government decides to cut the major price for small businesses. In my opinion, it is extremely helpful for Chinese economic recovery. No doubt the tax cutting policy really benefits those small enterprises and reduces their financial burden. They don’t need to worry of the high tax and it is easier for them to accumulate wealth. Obviously they get more money than before and will undoubtedly consume more as well. Therefore more and more money will circulate in the Chinese economy and sooner or later Chinese people will achieve the goal of economic recovery.
However many Chinese people argue that if the policy are implemented, Chinese government will have much less tax revenue to spend to stimulate economic development. However I don’t think so. I believe Chinese people become easier to create wealth and consume more due to the tax-cutting policy; thus because of the gradual growth in income and consumption, net tax revenue may also increase which benefits the government as well.
REFERENCES
Tax cut to benefit over 900,000 enterprises. Xinhuanews. Receive from
http://news.xinhuanet.com/english/china/2012-11/26/c_132000164.htm
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