It Is Necessary For China To Re-Examine The Tax And Fee System And Plan A New Round Of Tax Reform From A Strategic Height.

China's per capita GDP has exceeded 8000 US dollars, which is in a critical period of structural adjustment and pformation of growth pattern, and the tax structure should be correspondingly reformed.

The existing tax system has obviously restricted the development of economic and social pformation.

Pushing ahead with tax reform and reshaping China's global competitiveness

In order to promote economic recovery, the world's major economies gradually shift the policy center from monetary policy to fiscal policy. A new round of tax cuts is emerging. The United States is the leader.

The Trump administration plans to introduce a sharp tax cut plan. The British government, the French presidential contenders and other major developed countries are working to promote tax reduction legislation, and India and other developing countries have announced tax cuts.

In comparison, China's

The intensity of the measures is not great. Apart from the increase in the camp, the reform of the tax system does not involve substantive reform. More is to make up and repair on the existing basis.

In February this year, the amendment of the enterprise income tax law did not reduce the tax rate, and the long-awaited personal tax reform was not included in this year's legislative plan.

Considering that the US tax reform may lead to the reshaping of global competitiveness of major economies, it is necessary for China to increase its efforts in tax reform so as to avoid losing the opportunity in the new global competition.

On the afternoon of April 26th, Eastern time, US finance minister Nouchine and Trump economic adviser Cohen held a press conference to formally announce the latest tax reform plan of US President Trump.

The tax reform plan is considered to be the largest tax reduction plan in the history of the United States, which is largely consistent with Trump's election plan, which will benefit the enterprises, middle class and top income people, significantly enhance the competitiveness of the United States and stimulate the vitality of economic growth.

The tax reform plan mainly focuses on three aspects: reducing enterprise tax rate, reducing personal tax burden and increasing overseas tax revenue.

In terms of corporate taxation, the biggest highlight of the tax reform plan is to reduce the corporate tax rate from 35% to 15%. In addition, 3.8% of Obama's medical insurance tax should be abolished, and the regional tax system for American companies should be equitable.

From the perspective of corporate tax rates of major developed countries over the years, the general trend is gradually decreasing, and the decline since the 2008 financial crisis is relatively large.

The US corporate income tax rate has remained unchanged at 35% for decades.

Compared with the major developed countries, the current corporate income tax in the United States is significantly higher than that in Germany, Britain, Canada, Japan and other countries, slightly higher than France.

The corporate tax rate has dropped sharply from the current 35% to 15%, and will drop to almost the same level as Germany and Canada.

In addition to corporate income tax, Germany has 10%-18% business tax, Canada also has goods and services tax, social security tax, various surcharges, and other taxes in the United States are relatively small, so the comprehensive tax burden of American enterprises will be significantly lower than that of other developed countries.

If the corporate tax rate falls to 15%, which is close to the tax rate of some tax havens, it will significantly enhance the competitive advantage of the United States and attract a large number of enterprises to stay in the US.

In terms of personal income tax, the level and tax rate of personal income tax are reduced. The highest tax rate falls from 39.6% to 35%, from seven to three, 10%, 25% and 35% respectively.

In addition, the tax allowance for personal income is doubled, and the standard deduction for couples filing tax is doubled to $24000. The inheritance tax is revoked, and the tax reduction for families with children is also recommended.

The tax reform scheme not only reduces the tax burden on the middle class, but also lightens the burden on owners and farmers, which will promote consumption growth and individual sector investment demand.

For overseas enterprises to raise taxes, the overseas retained trillions of US dollars are taxed once and for all, the profits that American companies stay abroad are charged at 10% of the tax rate. If overseas profits are repatriated to the United States, they will be charged a tax of up to 35%.

At present, US enterprises retain overseas funds of US $2 trillion and 600 billion, mainly in various tax havens. The tax rate on this part of overseas retained funds has not been determined yet, but finance minister Nouchine said the tax rate would be "very competitive".

We should increase taxes on overseas departments, promote investment in the United States, and strive to keep investment in China and promote manufacturing and business development.

If the tax reduction plan is successfully implemented, the company tax will be reduced to only 15%. It is expected to reduce US revenue by 108 billion US dollars in 2017, and it will reach 215 billion US dollars in 2018, which will greatly enhance the level of corporate profits.

In the medium to long term, it is estimated that a comprehensive tax reform plan of 10 years will cut taxes of 4 trillion and 400 billion to 5 trillion and 900 billion dollars, which will undoubtedly significantly enhance the international competitiveness of the United States.

It is worth noting that large-scale tax cuts will increase the financial pressure of the federal government. Tax cuts will bring economic growth and broaden the tax base.

The United States and China are the first and second largest economies in the world. Their tax burden has a great impact on the competitiveness of the two industries.

China's indirect tax system is bound to impose a heavy burden on the tax burden of enterprises. After Trump's administration, he strives to introduce large-scale tax reduction measures, which may further increase the relative production costs of Chinese enterprises.

1. China's tax cut is not as strong as that of the United States.

In recent years, China has adopted many measures to reduce taxes and reduce fees.

In April 19th, the Executive Council of the State Council announced 6 tax reduction measures. It is expected that the tax burden of various market players will be reduced by about 380000000000 yuan in 2017, plus a number of measures to reduce fees in the first quarter. The burden will be reduced by 200 billion yuan. This year, the total tax reduction and reduction will be reduced by 580 billion yuan.

Tax reduction and tax reduction has achieved some success. The growth of public revenue in China has gradually declined. In 2015, fiscal revenue grew by 5.8%, which was 1.1 percentage points below the GDP growth rate. It was the first time since the beginning of 90 in the last century that it was slower than the GDP growth rate.

In 2016, the national public finance revenue was 15 trillion and 960 billion yuan, and the growth rate dropped to 4.5% compared to the same period. The growth rate was lower than the GDP growth for 2 consecutive years.

In 2016, fiscal revenue accounted for 21.44% of GDP, the first decline since 1995.

Since the beginning of this year, the economy has obviously recovered and the vitality of enterprises has been enhanced.

Although China has made some achievements in reducing taxes and lowering taxes in recent years, compared with the US tax cuts, the intensity and scope of our tax reform are still insufficient.

In addition to the increase in business tax, the rest of the tax reform measures have been progressing very slowly. From the specific point of view, the enterprise income tax law was amended in February for the first time in 10 years, providing more tax concessions, but the core corporate income tax rate has not dropped, still 25%.

The long-awaited personal tax reform has not been included in the 2017 legislative plan, and the personal tax with stronger ability to regulate property tax and inheritance tax is far from being expected.

At present, the critical period of economic growth kinetic energy conversion is coming, and the consumption tax reform is in the window stage. However, the slow reform of consumption tax has become one of the reasons that restrict consumption growth and lead to the consumption outflow.

Judging from the recent trend of reform, the next step is not only tax cuts but also tax increases.

2. China's macro tax burden is higher than that of the United States.

The macro tax burden has different caliber. If we only calculate the proportion of tax revenue to GDP, China will be around 18.5%, which does not seem to be very high.

Since a large proportion of our revenue is non tax revenue, the actual value will be far greater than that.

There is no social security tax in China. Social security is in the form of payment.

The US macro tax burden includes the social security tax. If the social security tax is excluded, the US tax revenue will account for about 19% of GDP and equal to that of China.

According to the special standard (SDDS) issued by IMF data, the Ministry of Finance announced the total fiscal revenue under the broad fiscal revenue, including general public revenue, government fund income other than the pfer of state-owned land use right, state owned capital operating income, and social insurance fund income.

In 2015, the total revenue of China's broad fiscal revenue amounted to 198480 billion yuan, accounting for 29.33% of GDP.

In 2016, the share of GDP in the United States under the same caliber was 26.36%, slightly higher than that in the United States.

In 2015, the land revenue from the National Treasury was actually 3 trillion and 365 billion 773 million yuan. If the income of the pfer of the right to use state-owned land was enlarged, the total fiscal revenue in 2015 would be 23 trillion and 210 billion and the proportion of GDP would be 34.3%.

According to this caliber, China's macro tax burden is not only higher than that of the United States, but also higher than the average OECD macro tax burden.

3. the tax and fee items of Chinese enterprises are complicated and heavy.

Although China's overall tax burden is not heavy compared with other countries from a macro point of view, it is not much more than that of the United States, but China's indirect tax based tax system determines that most of the tax revenue comes from enterprises. The total tax revenue has reached about 90% of the enterprises' income, which is an important reason for the heavy burden of enterprises' taxes and fees.

Judging from the main tax categories, China involves more than 10 enterprises' tax and fee catalogues, among which 3 are enterprise income tax, value-added tax and business tax.

According to the 2016 tax data, corporate income tax, value-added tax and business tax account for 22.1%, 31.2% and 8.8% of the total tax revenue respectively, accounting for 62.2% of the total tax revenue.

The proportion of tax collection in the US tax system is very small. The corporate tax burden is mainly 1 kinds of corporate tax (similar to corporate income tax), accounting for 16% of the total tax revenue.

Apart from paying taxes on income tax, value-added tax and consumption tax, Chinese enterprises should pay about 13% of the additional taxes and fees, including about 7% of urban maintenance and construction costs, 5% of Educational Surcharges and 1% of flood control fees.

According to the world bank, the total tax rate of Chinese enterprises (the ratio of corporate tax to corporate profits) is much higher than that of the United States.

In 2016, the total tax rate of Chinese enterprises was 68%, which ranked twelfth in 190 global economies, and the total tax rate of us enterprises was 44%.

In addition to the tax burden, the domestic manufacturing industry is also faced with labor, land price increases, capacity and resource constraints.

The cost of enterprises continues to rise and investment efficiency continues to decrease. The total investment in fixed assets has exceeded 47% of the total real capital, which means that nearly half of the investment expenditure is difficult to form capital.

In 2016, there was a cliff like decline in private investment, and nearly 45% of private investment was investment in manufacturing, indicating that the growth of manufacturing industry was under great pressure.

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4. China's personal tax structure is simple and extensive.

Because of the differences in tax system, the personal tax in the United States accounts for a large proportion of fiscal revenue, accounting for 45%-50% in most years.

China's personal tax contribution is very small, accounting for 6%-8%.

Although the tax burden of the US is higher than that of China from the total tax revenue, the social welfare enjoyed by the American residents is far better than that of China, which means that the return of individual tax is very great.

When the taxable income is determined, the United States provides many detailed income deduction items, including commercial deduction and personal deduction, such as the raising of children of taxpayers, the support of the elderly over 65 years old, and the exemption of disabled persons.

Taking into account the social welfare effect, China's personal tax burden may not be lower than that of the United States.

In addition to the social welfare effect, the US personal tax structure is very rich, and has a strong role of "all rich and poor", while China's personal tax structure is too single.

The individual taxes that the United States levying includes personal income tax, property tax, inheritance tax, gift tax and so on.

China's personal taxes are mainly personal income tax, no capital gains tax, and no property tax, inheritance tax, gift tax and other taxes.

Comparatively speaking, China's personal income tax mainly focuses on the wage earners' income tax. For the rich's investment income tax, property tax, inheritance tax, property gift tax and other deficiencies, the system leakage is relatively large.

For the vast number of working class, China's personal tax burden is significantly higher than that of the United States.

5. China's non tax revenue far exceeds that of the United States.

Although in recent years, efforts to clean up all kinds of fees have been intensified. Due to the serious phenomenon of diversification of the fees, it is difficult to effectively restrain the non tax revenue.

Even if the economic growth rate is decreasing gradually, the growth rate of non tax revenue in each year is in 2 digits, and the proportion of non tax revenue in fiscal revenue has increased year by year, reaching 18.3% in 2016.

Non tax revenue mainly includes special income, administrative fees, confiscation income and other income. Various items of fees are important reasons for Chinese enterprises and individuals to feel heavier tax burden.

The main non tax revenue in the United States is all kinds of charges, including administrative fees, airport, park and other public facilities, and non tax revenue should be included in budget management.

Non tax revenue accounts for a relatively low proportion of US fiscal revenue, which is relatively stable in each year, at a level below 5%, which is lower than that in China's 1/3.

Three, China's tax reform proposals

Although tax cuts will reduce fiscal revenue in the short term, it can play a role of "fish farming with water supply"; it can not only create a better business environment for the real economy, activate the endogenous driving force of the real economy, but also gradually expand the tax base.

In the medium to long term, with the emergence of the "laver curve" effect, lowering tax rates will help increase tax revenue.

The recent US tax cut policy is another external pressure on China's global competitiveness.

It is necessary for China to re-examine the tax and fee system and plan a new round of tax reform from a strategic height so as to reinvent China's global competitiveness.

1., tax reform is needed according to economic development and pformation.

The adjustment and optimization of tax structure depends on the development level of the economy and society and the management capacity of fiscal and tax revenue.

China's per capita GDP has exceeded 8000 US dollars, which is in a critical period of structural adjustment and pformation of growth pattern, and the tax structure should be correspondingly reformed.

At present, China is mainly indirect tax and direct tax is subsidiary, which is suitable for developing countries with low and middle income. The current tax system has obviously restricted the development of economic and social pformation.

The direction of future reform:

First, we should gradually reduce the proportion of indirect taxes, and we should gradually reduce the proportion from 90% to 70%.

Only by adjusting the macro tax structure and reducing the indirect tax can we really play a tax cut role in the production process.

Two, with the increase of residents' income level and living standard and the widening gap between the rich and the poor, the proportion of direct taxation should be increased.

At present, many areas suitable for direct taxation in China are in vacuum, and the collection space is very large.

Direct taxation is relatively fair and reasonable, which is conducive to the macro regulation of taxation.

Three, we should adjust and optimize the structure of central and local taxes.

To strengthen the support of the central government for the economically underdeveloped areas and enhance the flexibility and effectiveness of local finance, we should increase the proportion of the central and local taxes to the national tax revenue, reduce the proportion of the tax revenue collected by the central and local governments in the national tax revenues, clearly define the right to financial property rights and enhance pparency.

2. reduce fees and reduce the proportion of non tax revenue.

China's enterprise charging projects are complicated, which increases the operating costs of enterprises.

In recent years, non tax revenue has increased rapidly, accounting for more than 3 times the proportion of fiscal revenue.

We should further strengthen the clean-up work of all fees and regulations, and standardize relevant fees through laws.

Cancellation of repetitive charging items and fees charged by administrative departments at all levels shall be charged; tax items with tax nature should be changed to taxes; and fees that need to be retained must be strictly regulated through laws and regulations.

The fundamental reason behind the repeated prohibition of arbitrary fees, fines and arbitrary apportionment is the relatively lagging behind the reform of local taxes.

In order to develop the local economy and other construction businesses, local financial support is needed.

Because of lagging tax reform, it is not conducive to increasing local revenue. In order to raise funds needed for economic and social development, local government financing needs and charges tend to be stronger.

Therefore, we need to accelerate the pace of local tax reform, such as sewage charges to environmental taxes.

3., substantially reduce the burden of enterprises' taxes and fees.

In recent years, a large number of tax and fee reduction measures have been introduced, but enterprises generally feel that the sense of tax burden is still very heavy, mainly because of the two reasons of higher comprehensive cost and incomplete reform of tax and fee structure.

Under the current tax system, no matter how profitable the company is, even if it is a loss, it is necessary to pay VAT, plus all kinds of fees, funds, apportionment and fines.

In the future, it is necessary to make adjustments in the following aspects:

One is to lower the corporate income tax rate.

Under the new tide of international tax reduction, it is urgent to reduce the corporate income tax rate. The revision of the enterprise income tax law should be substantially promoted.

The two is to lower the value added tax rate.

The VAT rate from 4 to 3 is still not enough, and the tax intensity should be further reduced.

The three is to reduce indirect taxes and fees.

There are many tax collection projects involving enterprises. There are more than 10 incomplete statistics, and at least dozens of items should be reduced.

Four is to improve the business environment and reduce the overall cost.

We should improve the market mechanism and reduce the comprehensive cost of institutional paction costs, land use energy costs, financing costs, logistics costs and so on from the reality of enterprises.

4., carry out the reform of personal comprehensive income tax.

More than 80% of the countries in the world adopt the comprehensive income tax system for individual tax. China belongs to a few countries that adopt classified income tax system.

After years of discussion and study, the reform of individual tax has not yet been substantially promoted.

With the development of economy and society, the reform of personal income tax is imminent. It is necessary to enhance the ability of individual tax to get rich and poor, play a role of "raising low, expanding the middle and limiting the high", and promoting the growth of middle income groups.

First, we should implement the comprehensive income tax system.

We should collect the taxable income of all kinds of income of taxpayers, expand the scope and standard of deducting expenses, and set up independent deductions for family education expenses, medical expenses, mortgage interest and rent, before tax deduction.

The two is to raise the threshold of personal tax.

Under the current individual tax system, wages and salaries are the easiest to collect.

The starting point of 3500 yuan is still low. The most important burden of tax burden is the middle-income earners and the wage earners in the first and second tier cities, which not only aggravate the personal burden, but also affect consumption expenditure.

The three is to study and formulate various types of taxes that are highly regulated.

Speeding up the research and development of property tax, real estate tax, inheritance tax and gift tax will not only enhance the ability of tax adjustment but also make up for the reduction of tax revenue brought by enterprises' tax reduction.

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