Differentiate VAT, Encourage more consumption, restore market confidence

Currently, the market confidence is low, especially the financial market has become very sensitive to all sources of shocks. Why do we have such low market confidence? The reason is that we have very low inflation and there are many negative exogenous factors. Most of the sources of shocks come from the outside world. The key issue is how to deal with problems coming from the rest of the world. It is important to boost the domestic consumption. In order to boost consumption, it is important for the central government to have enough budget to run the country with lowering tax income. Lowering income tax and raising the minimum income level can help to raise the population participation ratio, especially when more jobs are created. Spending on benefits does not need to be raised, in order to keep the labour force productive. Charging different levels of VAT can still contribute to the death redistribution, as well as give vast major of the population incentives to spend more of their incomes. Goods and services can be affordable to more than half of the populations should be considered to be charged lower tax, compared with those only the super rich can afford. By doing tax differentiation, the government can raise the same level of tax income from consumption, but create more consumption.