Neutral fiscal policy means that the fiscal laws and regulations formulated and issued by the state do not interfere with the total social demand, that is to say, they neither expand nor shrink the social demand. Generally speaking, neutral fiscal policy is a kind of fiscal adjustment with relatively balanced revenue and expenditure, which will not produce too many deficits or balances.

Brief introduction of neutral fiscal policy

Neutral fiscal policy originated in Britain, and its founder was British economist Smith. Neutral fiscal policy must include appropriate tax reduction measures, at the same time, it should also reduce government expenditure and try its best to make ends meet. Under the modern social system, it is indispensable for national policies to intervene in the economy. If a large deficit is generated, it will not be conducive to the stable development of social economy. When the government's tax revenue is equal to the government's expenditure, it is called balance of payments, which can effectively prevent excessive inflation. China's tax revenue is mainly turnover tax. By adjusting the turnover tax rate, it can play a dynamic role in economic development.