Abstract: The rationality of tax structure setting will directly affect production and consumption behavior, and it will have an important effect on the change of industrial development trend and structure. Based on the provincial panel data from 2003 to 2012, this paper studies the inner link between current tax structure in our country and manufacturing growth and structural transformation, so as to determine whether there is a barrier of current tax system design to the structural transformation of manufacturing. The empirical results show that the increase of VAT and individual income tax as a proportion of total tax revenue are not conducive to the increase of real labor productivity in manufacturing, while the relative position promotion of individual income tax is conducive to manufacturing transformation which is dominated by technology-intensive industries. Therefore, the classification combined with comprehensive collection of individual income tax reform and the VAT tax reduction policy are conducive to expanding the scale of the real economy and also promoting the upgrading of real economy. However, more attention should be paid to avoid the tax burden shifting to the terminal manufacture industry which is caused by VAT reduction policy and the negative impact of the increase of individual income tax proportion on low-end manufacturing industry.

Key words: tax structure, structural transformation, manufacturing, labor productivity