In most developed countries the function of consu mption tax is mainly reflected in the organization of tax revenue, the regulation of consumption structure, and more distinctly in the correction of externalities through raising the prices of taxable consumer goods. This empirical analysis shows that in recent years, although China has made some adjustments to the items and rates of consumption tax, the overall effect of the consumption tax is still limited. Therefore, further adjustment and reform of the consumption tax policy must be carried out to achieve four objectives. The first is to strengthen the three functions of consumption tax and expand the proportion of consumption tax in GDP. The second is to give full play to the externality correction function of the consumption tax by expanding,integrating and adding more items to the consumption tax. The third is to give reasonable play to the income regulation function of consumption tax with clear a target and full regulation. The fourth is to make a reasonable division between central and local taxes, so as to match optimized institutional reforms. In most developed countries the function of consu mption tax is mainly reflected in the organization of tax revenue, the regulation of consumption structure, and more distinctly in the correction of externalities through raising the prices of taxable consumer goods. This empirical analysis shows that in recent years, although China has made some adjustments to the items and rates of consumption tax, the overall effect of the consumption tax is still limited. Therefore, further adjustment and reform of the consumption tax policy must be carried out to achieve four objectives. the second is to give full play to the externality correction function of the consumption tax by expanding, integrating and adding more items to the consumption tax. is to give reasonable play to the income regulation function of consumption tax with clear a target and full regulation fourth is to make a reasonable division between central and local taxes, so as to match optimized institutional reforms.