ABSTRACT
In 1998, there were disputes about deflation and there were many suggestions to stimulate the economy by various measures including tax cuts. Tax cuts mean to reduce tax revenue to decrease the tax burden of the enterprises or residents by adjusting existing tax policy. The meaning includes three levels. First, it should be realized by adjusting or changing tax reform formally, such as by reducing tax categories, lowering tax rates, or narrowing the tax base, rather than non-standard administrative behaviors decided by any leader or any Party and government department. Second, it aims to create a long-term systematic arrangement but not a short-term expedient. Third, in the short term, the direct result is that the total tax revenue decreases or tax burden of the enterprises and residents decreases – or at least, the proportion of tax revenue in GDP decreases. The implementation of macroeconomic policies for more than one year helps to understand the complexity of China's economic situation.
