The thesis analyzes the main stream of the economic theories and practice of tax reduction which the western countries carried out to improve the economic growth after the Second World War.

It points out that it is correct choice for the positive financial policy not to carry out "tax reduction policy".

The policy of tax reduction as China s main economy polycy and measures of microeconomy control can not be substituted.

In this article,we retrospected the process of china s anti-deflation monetary policy and factors which constrainted its effectiveness,suggested that the authority should continue to carry out anti -deflation policies by means of interest cut,tax cut and enlargement of govern ment spenditure.

By the influence of Keynes requirements of the management theory,people promote the economic growth function mechanism to the tax cut only in its demand effect,but not in its supplies effect.

However,the reality of less vigorous market demand and pressure of deflation cause the high voice of tax abatement.

By analysing the result of tax abatement under the condition of objective economy, we shouldn t practice the policy of tax abatement now.

Influenced by the trend of reducing taxes, it has become the key point attracting much attention about whether it is suitable for China to reduce taxes and how to do it after joining in WTO.