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(2021) Unleashing the New Potential of Consumption

To inspire policymakers and companies to boost consumption, the panellists explored a wide range of topics, including taxation, income distribution, and industry innovation, and put forward insightful ideas and suggestions.

From a macro perspective, Gao Peiyong, vice president of the Chinese Academy of Social Sciences, elaborated on the role of taxes in unleashing the potential of consumption. He noted that, to promote consumption through taxes, the focus should be on tax structures instead of tax revenue. Due consideration should be given to the following three issues. First, under its current regressive tax system, China mainly levies indirect taxes, which disproportionally burden low income people and go against the purpose of expanding consumption. Second, by increasing the proportion of direct taxes and decreasing the proportion of indirect taxes, taxes can play an effective role in regulating and lowering prices, thereby helping to expand consumption. Third, increasing the proportion of direct taxes could amplify the role of taxes in adjusting income redistribution, reducing the Gini coefficient to some extent.

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