VAT Sharing Reform and Regional Income Disparities in China: Pathways to Common Prosperity

The purpose of this report is to analyze the impact of VAT sharing reform on the income gap between urban and rural areas in China. The VAT sharing reform, a significant fiscal policy, aims to address fiscal decentralization and revenue distribution. This report highlights the importance of this reform in narrowing the urban-rural income gap, which is crucial for achieving common prosperity. The key issues analyzed include the disparities in income levels, access to public services, and employment opportunities between urban and rural areas. The methodology involves case studies, data analysis, and literature review. The primary findings suggest that while the reform has contributed to revenue redistribution and improved infrastructure in rural areas, it also presents challenges such as fiscal imbalances and inefficiencies. The report offers practical suggestions to enhance the effectiveness of the reform, including targeted revenue redistribution, incentive structures for local governments, and integrated fiscal policies.