Since the Third Plenary Session of the 18th Central Committee of the Communist Party of China, in accordance with the decision-making and deployment on the establishment of a modern financial system, the reform of the fiscal and taxation system has achieved remarkable results, and the framework of the modern financial system has been basically established. Recently, after the deployment of the first economic work conference and the national financial work conference, it was further clarified that a new round of reform around the fiscal and taxation system will be opened. In the new year, it is worth looking forward to how the fiscal and taxation system will actively and steadily plan to promote a new round of reform around "improving the modern budget system, optimizing the tax structure, and improving the fiscal transfer payment system".
2023 is the first year for the full implementation of the spirit of the 20th National Congress of the Communist Party of China, and also the 10th anniversary of the Third Plenary Session of the 18th Central Committee of the Communist Party of China. Experts and scholars interviewed by the **Times Brokerage China reporter said that the focus of the new round of reform should be to build a clear and reasonable fiscal and tax relationship between the government and the local government, through the establishment of a comprehensive, systematic and law-based budget supervision system, comprehensively promote the integration of budget management, optimize and improve the local tax system, clarify the financial relationship between the central and local governments, and better play the joint role of the effective market and the promising.
The reform is moving towards a "deep-water area", and the financial relationship between the central government and the local government needs to be straightened out urgently.
In 1993, the "Decision on the Implementation of the Fiscal Management System of the Tax-sharing System" was made, and the financial system shifted from the "separate meals" system to the tax-sharing system, and built a long-term and effective relationship between the local government and the systematic and standardized budget system and tax system, which played an important fundamental role in promoting economic and social development.
In the past, the focus of the reform of the tax-sharing system was tax sharing, that is, the reform of the relationship between the distribution of fiscal revenue. With the passage of time, the unresolved problems of the reform of the tax-sharing system and the current economic situation faced by the fiscal and taxation system are intertwined, and some contradictions are deepening day by day. Wang Huayu, deputy director of the Finance and Taxation Law Research Center of Shanghai Jiao Tong University, said in an interview with a reporter from **Times Brokerage China that these problems are mainly reflected in the lack of comprehensive and systematic budget supervision and management, the urgent need to optimize the overall tax system, and the unclear division of local fiscal powers and expenditure responsibilities.
After the reform of the tax-sharing system, the fiscal revenue has been improved, and the concentration of financial power has been realized, but the power of fiscal expenditure has remained more in the local government, and the problem of mismatch between the financial power and the power of the central government has continued to intensify. Lu Bingyang, a professor at the School of Finance and Economics of the Chinese People's University, pointed out that the financial pressure at the county and township levels is very high, and a very important reason is that they have undertaken many tasks assigned by their superiors. The authority for these tasks belongs to the superior, but it falls on the subordinate, who bears the responsibility for the expenditure.
To this end, the current round of fiscal and taxation system reform since the Third Plenary Session of the 18th CPC Central Committee has been aimed at "basically establishing a modern financial system" and focusing on the three major tasks of "improving the budget management system, perfecting the taxation system, and establishing a system that is compatible with the power and expenditure responsibility". After 10 years of hard work, a budget system with scientific standards, standardized and transparent, and strong constraints has been basically establishedA sound tax system with scientific taxation, optimized structure, sound laws, and standardized and fair taxation system;The relationship between clear rights and responsibilities, financial coordination, and regional balance with local finance has gradually taken shape.
At present, the world is undergoing major changes unseen in a century, and the risks and challenges, contradictions and problems that need to be resolved in China's development are becoming more complex. Judging from the short-term difficulties, fiscal revenue and expenditure have continued to maintain a tight balance, and there is a large contradiction between fiscal revenue and expenditure in some localities, especially at the grassroots levelSome local special bond projects are not well planned, and there are idle fundsSome cities and counties have weak solvency and high debt risk. On the whole, the pressure on local financial operation is more prominent.
* Fan Yong, Secretary of the Party Committee of the School of Finance and Taxation of the University of Finance and Economics, pointed out that the reason for the local fiscal pressure is first of all the institutional problem of the tax-sharing system, that is, the mismatch between financial power and administrative power. In addition, the lack of institutional safeguards is also a cause of financial difficulties. When the division of income authority is not clear, transfer payment is a catch-all system that plays a key role in difficult times.
At present, local finance is no longer suitable for high-quality development in terms of total volume, structure, and internal circulation. Liu Yuanchun, president of Shanghai University of Finance and Economics, said that solving local financial problems requires systematic thinking. **The relationship with the local government needs to be comprehensively sorted out, and at the same time, the tax structure must be optimized, and the fields and methods of transfer payments also need to be comprehensively reconstructed.
In the medium and long term, major national strategies such as building a new development pattern, promoting high-quality development, and building a unified market have put forward higher requirements for fiscal co-ordination and service guarantee capabilities. **Ma Haitao, President and Deputy Secretary of the Party Committee of the University of Finance and Economics, pointed out that the fiscal and taxation system is embedded in all fields of governance, and only by constantly adapting to the theme and mission of the new era can we better achieve the goal of building a modern socialist country in an all-round way.
In the new era and new journey, the report of the 20th National Congress of the Communist Party of China has pointed out the direction for further deepening the reform of the fiscal and taxation system: improving the modern budget system, optimizing the tax structure, and improving the fiscal transfer payment system.
* The division of fiscal powers and expenditure responsibilities with local governments is called the "most difficult bone to gnaw" in the reform of the fiscal and taxation system. The interviewed experts believe that the three reform directions deployed in the report of the 20th National Congress of the Communist Party of China are all related to the local financial system and local financial operation, and more directly to the division of local powers and expenditure responsibilities. Sun Kunpeng, an associate professor at the School of Finance and Taxation of the University of Finance and Economics, told reporters that on the whole, the primary task of the new round of fiscal and taxation system reform may be to form a set of financial relations that can mobilize the enthusiasm of all levels, improve the efficiency of financial resource utilization, and effectively manage risks.
Luo Zhiheng, chief economist of Guangdong Kai, said that in the future, it is necessary to further clarify the relationship between the market and the market, define the scale, avoid the continuous expansion of expenditure responsibility, and avoid the contradiction between limited financial resources and unlimited liability** Collect part of the authority and expenditure responsibility, reduce the expenditure responsibility and expenditure burden of the local government;Further stabilize the macro tax burden;Continuously regulate transfer payments, especially transfer payments of common powers;Deepen the reform of the financial system below the provincial level, strengthen the provincial-level powers and expenditure responsibilities at the provincial-level level, and endow the provincial-level authorities with the authority to coordinate local areas.
Improve the efficiency of the use of funds, and comprehensively promote the integration of budget management.
Continuously deepening the reform of the budget management system and improving the modern budget system is an important guarantee to ensure the implementation of national strategies and policies. At present, 36 provinces, autonomous regions, municipalities directly under the Central Government, cities specifically designated in the state plan and the Xinjiang Production and Construction Corps have built and applied an integrated system of financial budget management. The integrated system of financial and budget management basically covers administrative divisions and budget units at and above the county level, and has initially realized the connection of all links of budget management.
However, in June this year, Hou Kai, Auditor General of the Audit Commission, pointed out in the "Audit Report on the Implementation of the Budget and Other Financial Revenues and Expenditures in 2022" (hereinafter referred to as the "Audit Work Report") that there are still many weak links in the management of budget allocation, and the reform of the modern budget system needs to be promoted in depth. Liu Kun, former minister of the Ministry of Finance, also pointed out in a signed article that there are still deficiencies in the overall planning of the budget, budget control and constraints, and the use of financial resources at this stage.
According to the "Audit Work Report", in actual work, the boundary between the general public budget and other budgets in the financial budget management is not clear enough, overlaps with the state-owned capital operating budget expenditure, and duplicates the investment direction of **investment**;The budget allocation is not scientific and reasonable, some **investment** does not focus on solving financing bottlenecks as required, and the clean-up and integration of transfer payments are not in place;The budget performance management is weak, the performance target setting is unreasonable, and some projects have problems such as lack of constraints on performance indicators.
Liu Kun pointed out that at present and for some time to come, in order to maintain the basic stability of the macroeconomic tax burden and correspondingly be in a state of tight balance in finance, it is necessary to strengthen the overall planning of resources and concentrate financial resources to do major things. In terms of specific directions, the interviewed experts believe that fiscal budget management should be strengthened from three aspects: continue to strengthen the overall planning and level of the "four accounts" budget, continue to strengthen the effective management of surplus funds and idle assets, and continue to strengthen the overall financial planning and guarantee of people's livelihood and well-being and key national strategies.
Improving the efficiency of the use of funds is an important part of the fiscal budget work in the new period. Wang Huayu said that it is necessary to promote a comprehensive whole-process supervision mechanism. On the basis of strict budget control, accounting and final accounts, the implementation of classified management of funds, improve the whole process of supervision mechanism, "money in the system", comprehensively promote the integration of budget management, deepen the integration of local financial system information and financial and industry department information, and fully reflect the flow of budget funds and the whole life cycle of budget projects.
Sun Kunpeng believes that deepening budget performance management is an important means to improve the efficiency of financial funds, to expand the scope of budget performance evaluation, improve the quality of performance evaluation, through the scientific performance evaluation system, the first expenditure and income for targeted analysis and evaluation, to ensure that the exact needs of resource investment and the actual effect match. "Specifically, it is necessary to vigorously promote the integration of budget management in an all-round way. ”
The key to strengthening the performance management of the financial budget lies in scientifically setting the target range of performance evaluation. Sun Kunpeng suggested that in the future, when setting the performance evaluation targets of the financial budget, it is necessary to fully consider the joint participation of the applicant for funds, the allocation of funds and the approval of funds, so as to enhance the voice of the financial budget department in the setting of goals, and ensure that the performance objectives of various departments, policies and projects are specific, clear, quantifiable and evaluable. In terms of the application of results, it is necessary to improve the feedback and rectification mechanism of evaluation results to ensure that the results of budget performance evaluation can be truly applied and affect the distribution of benefits. Relevant departments should formulate a rectification plan for performance problems based on the evaluation results, and form a virtuous circle of feedback, rectification, and performance improvement.
first easy and then difficult, first there is and then excellent", and actively promote the improvement of the local tax system.
In recent years, China's tax reform has made significant progress, the scale of tax cuts and fee reductions is unprecedented, and remarkable results have been achieved in tax regulation and control. However, as China's economy continues to evolve from high-speed growth to high-quality growth, the growth rate of fiscal revenue has slowed down, and the contradiction between local fiscal revenue and expenditure has emerged due to factors such as large-scale tax cuts and fee reductions and the continuous increase in some rigid expenditures.
In the context of accelerating the construction of a new model of real estate development, the traditional "land finance" model is difficult to sustain, and the local fiscal revenue is more dependent on tax revenue. In the first 11 months of 2023, the revenue of the local general public budget at the same level was 108439 billion yuan, a year-on-year increase of 87%；The revenue of the local budget at the same level was 4,817.9 billion yuan, a year-on-year decrease of 144%。
The importance of tax revenue has become increasingly prominent, and the discussion of the local tax system in the academic community has never stopped, and the interviewed experts generally believe that the local tax system needs to be improved as soon as possible.
From the perspective of the local tax base, Lu Bingyang pointed out that the current local tax is mainly characterized by a liquid tax base, and the taxpayers are mainly enterprise taxpayers. The advantage of the liquidity tax base is that it can mobilize the enthusiasm of local economic development, but the negative impact is to stimulate the "bottom-to-bottom competition" between local governments, because the lower the tax rate, the more conducive to attracting investment and developing the economy, which is not conducive to high-quality economic development, is not conducive to the construction of a unified market, and is not conducive to the transformation of local functions.
From the perspective of the main tax types of local taxes, Sun Kunpeng pointed out that under the current system based on sharing taxes, the local government lacks the main tax types of local taxes that have a decisive impact on local financial resources and long-term stability. "At the same time, tax management authority, including the right to formulate laws and regulations, the right to interpret, and the right to reduce or exempt taxes, is mainly concentrated in the region, which to a certain extent affects the ability of the local government to adjust the allocation of resources according to the actual situation of the region. Sun Kunpeng told reporters.
Yang Zhiyong, director of the Fiscal and Taxation Research Center of the Chinese Academy of Social Sciences, believes that the new round of fiscal and taxation system reform needs to retain the basic framework of the tax-sharing system and design specific reform plans on this basis. The focus of reform should be to further improve the tax-sharing system, and the key to perfecting the tax-sharing system is to improve the local tax system.
The main direction of the reform of the local tax system is to cultivate local tax sources. Wang Huayu suggested that, according to the specific situation, the consumption tax reform and real estate tax legislation should be accelerated in a timely manner, and the implementation should be actively promoted in accordance with the principle of "easy first, then difficult, first and then excellent".
In terms of concrete implementation, the time has come for the reform of the consumption tax. Sun Kunpeng believes that it is necessary to promote the reform of consumption tax and adjust the scope and tax rate of consumption tax. At the same time, the consumption tax collection link can be moved back to local taxes, and more tax collection and management authority can be given to local governments, so as to effectively deal with the collection and management problems that may arise from the backward transfer of the collection link.
In addition, we should speed up the improvement of the local tax system with direct taxes such as individual income tax as the main tax, which can play a role in regulating income distribution and promoting social equity while increasing fiscal revenue for local governments. A number of experts stressed that the introduction of new taxes should also carefully assess the secondary risks that may be bringed. In the next step, we can consider speeding up legislation or expanding the scope of reform pilots, and steadily promote tax reform by observing the experience of the pilots.
Wang Huayu also pointed out that increasing the proportion of direct taxes is not simply to increase the scope or tax rate of direct taxes, but to consider the necessary structural optimization of the tax system elements of direct taxes on the basis of reducing the tax burden of indirect taxes and promoting the growth and expansion of the tax base.
In the specific process of promotion, it is necessary to appropriately reduce the tax burden of indirect taxes, promote the reform process of value-added tax in a timely manner according to the economic and social development situation, such as the 'three levels and two levels' and the whole chain deduction, and take the opportunity to promote the optimization of tax system elements such as consumption tax and tariff-related taxes. At the same time, under the premise of stable comprehensive tax burden, the proportion of direct tax burden should be moderately increased. Wang Huayu said.
It is worth mentioning that with the development of the digital economy, the deviation between the place of economic activity and value creation and the tax source under the current tax system has become increasingly prominent, such as the separation of wholesale and retail places from consumption places in e-commerce. Sun Kunpeng suggested that in the future, we should explore the division of local taxes to adapt to the digital economy, further improve the cross-regional distribution system of enterprise income tax, and solve the problem of uneven distribution of regional tax sources caused by the development of the digital economy.
Maintain an appropriate scale and raise the level of legalization of transfer payments.
In recent years, the reform of the fiscal transfer payment system has continued to deepen, and a transfer payment system consisting of general transfer payment, joint authority transfer payment and special transfer payment has been established. At the same time, the scale of transfer payments to local governments has continued to grow, and has exceeded 10 trillion yuan for the first time this year. The interviewed experts agreed that it is very necessary to maintain a certain scale of local transfer payments in view of the current pressure on local fiscal balance and to prevent fiscal risks. However, the continued maintenance of large-scale transfer payments may also affect the autonomy and enthusiasm of local governments.
Tian Zhiwei, deputy dean of the Institute of Public Policy and Governance of Shanghai University of Finance and Economics, pointed out to reporters that the overall dependence of local finance on transfer payments is still at a high level, and there is an upward trend in many central and western regions. ** Transfer payments are no longer just a "supplementary relief" for local fiscal gaps, but have become the "main force" for local finances to be maintained.
Transfer payment is not simply to give funds to the local government, but more importantly, we should determine a set of transfer payment systems that can fully mobilize the enthusiasm of both the local government and the local government. In Yang Zhiyong's view, too much transfer payment to the local government is easy to breed problems such as "waiting, relying on, and demanding" in the local government, which is not conducive to the play of local enthusiasm. Insufficient transfer payments received by local governments are also detrimental to local governments.
Sun Kunpeng suggested that in the future, in addition to general transfer payments and special transfer payments, the implementation of classified transfer payment models can be explored. Categorical transfer payment is a form between general transfer payment and special transfer payment, that is, the superior ** only stipulates the general direction of the use of funds, but the specific expenditure details are not specified. This method can not only conform to the instructions of the superiors, but also mobilize the enthusiasm of the local government.
Wang Huayu also said that the goal of special transfer payment is to ensure the implementation of major decision-making and deployment, and it is necessary to strengthen the management of the targeted and precise use of funds, strengthen the guidance and incentives for local governments, and improve the efficiency of funds.
It is worth mentioning that fiscal transfer payments play an important role in solving the problem of regional fiscal imbalance and promoting the equalization of basic public services between regions. However, there is no specific law for the current fiscal transfer payment system, and the relevant system is mainly the departmental regulations of the Ministry of Finance.
Tian Zhiwei believes that there should be a law to follow for local transfer payments. At present, the administrative measures for transfer payments are formulated by each department of the Ministry of Finance, and so far there are no laws and regulations at a higher legal level. In view of the current situation, the existing laws and regulations still lag behind the requirements of the practice of the fiscal transfer payment system, and the Transfer Payment Law and its implementation rules should be promulgated in a timely manner to restrict the establishment procedures, reasonable standards, management and information transparency of transfer payments.
In the view of Ye Zanping, member of the Standing Committee of the 14th National People's Congress and member of the Supervision and Judicial Commission, the Ministry of Finance has issued a series of opinions and normative documents on fiscal transfer payments, the legislative foundation is very good, and the legislative timing is relatively mature.
Editor-in-charge: Yang Yucheng.
Proofreading: Peng Qihua.