**The Economic Work Conference made it clear that it is necessary to deepen the reform of key areas, among which the deployment of "planning a new round of fiscal and taxation system reform" has attracted wide attention. Why is it proposed to plan a new round of fiscal and taxation system reform at this time? What are the key points and key points of the new round of fiscal and taxation system reform? China Tax News published the views of experts such as Ma Haitao, president of ** University of Finance and Economics, Zhu Qing, professor of the School of Finance and Economics of Chinese University, Lu Bingyang, executive director of the Institute of Finance and Taxation of Chinese University, and Wang Huayu, associate professor of Kaiyuan Law School of Shanghai Jiao Tong University.
Several key areas of the new round of fiscal and taxation system reform.
*President of the University of Finance and Economics, Ma Haitao.
In December 2023, the ** Economic Work Conference proposed: "It is necessary to plan a new round of fiscal and taxation system reform". The primary goal of the new round of fiscal and taxation system reform is to aim at the old problems accumulated over the years since the last round of reform, and lay a more solid foundation for high-quality development. The last round of epoch-making fiscal and taxation system reform was the reform of the tax-sharing system implemented in 1994, which reshaped the fiscal system and the country's governance capacity, laid a solid institutional foundation for the subsequent rapid economic growth, and provided a solid guarantee for the improvement of the country's governance capacity.
The new round of fiscal and taxation system still needs to face new problems in the current economic development. At present, economic development is still facing problems such as insufficient effective demand, weak social expectations, and many hidden risks. The year 2024 marks the 30th anniversary of the implementation of the tax-sharing reform, and it is also a crucial year for achieving the goals and tasks of the 14th Five-Year Plan. The reform of the fiscal and taxation system is a new chapter, based on the new situation and new stage, focusing on the current problems, adhering to the main line of reform logic of "leading finance with government and supplementing government with finance" since the tax sharing system, serving the modernization of the national governance system and governance capacity and the process of Chinese-style modernization, with the financial system as the core, and the division of local income, the financial system below the provincial level, the transfer payment system, the tax system, and the tax collection and management as the main starting point, and actively plan a new round of fiscal and taxation system reform.
First, comprehensively deepen the reform of the division of income between ** and local income. The division of local income is the basis and guarantee for the construction of "clear rights and responsibilities, financial coordination, and regional balance" and local fiscal relations. It is necessary to comprehensively deepen the reform of the division of fiscal revenue between the local government, ensure that the proportion of fiscal revenue is within a reasonable range, strengthen the rule of law in the division of local revenue, and improve the local tax system.
Second, accelerate the reform of the fiscal system at the provincial and sub-provincial levels. Since the Third Plenary Session of the 18th Central Committee of the Communist Party of China, the financial relationship between China and the local government has been gradually straightened out, but the reform process of the financial system below the provincial level has been relatively slow. The financial system problems at the sub-provincial level vary greatly in the form of provinces, and there is a temporary lack of unified normative documents, often presenting a situation of "one province and one policy". To further rationalize the financial system below the provincial level, a scientific and reasonable mechanism for dividing revenue below the provincial level should be established, the definition of the power and expenditure responsibility of the local government below the provincial level should be improved, and the financial management work below the provincial level should be standardized.
Third, efforts should be made to optimize the construction of the transfer payment system. It is necessary to promote the legalization of transfer payments, improve the mechanism for the categorical management of transfer payments, improve the preparation of transfer payment budgets, and improve the supervision and evaluation system for transfer payments.
Fourth, optimize the reform of the tax system. Maintain the stability of the macroeconomic tax burden and the tax system, and ensure the necessary fiscal absorption capacity and the ability to regulate and control. Establish a tax system to promote high-quality population development, and actively respond to the new population situation. Improve the green tax system and establish a modern green tax framework. Improve the modern tax system with the goal of common prosperity, and establish a modern, rational and orderly income distribution pattern. Timely clean up and integrate preferential tax policies, break down local protection and regional barriers, and promote the construction of a unified national market.
Fifth, improve the construction of the tax collection and management system. Tax collection and management is the key to the capacity building of tax governance, and improving the level of tax collection and management is of great strategic significance for the improvement of the national governance system. It is necessary to strengthen the building of the legal system for tax collection and management. Accelerate the construction of an intelligent tax collection and management system. Systematically promote tax publicity and education.
This year marks the 75th anniversary of the founding of the People's Republic of China. On the new development journey, it is the right time to plan for a new round of fiscal and taxation system reform. "Reform is always on the road, there is no smooth road to reform", the next step should be to effectively enhance economic vitality, prevent and resolve risks, and improve social expectations as the important goal of reform, in order to straighten out the financial relationship between the central and local governments, promote the reform of the tax system and tax collection and management, and solve the financial dilemma at the grassroots level according to local conditions as an important direction of reform, and continue to promote the effective improvement of the quality and reasonable growth of China's economy with the amount of finance, and continue to inject strong impetus into accelerating the construction of Chinese-style modernization.
A new round of fiscal and taxation system reform.
Do your best and do what you can.
Zhu Qing, Professor of the School of Finance of Renmin University of Chinese.
As an important part of comprehensively deepening reform, the reform of the fiscal and taxation system is related to the major relationships between the local government, the market and the country, and society. The word "planning" means that before the implementation of the reform, in-depth thinking and scientific research and judgment should be carried out.
The reform of the fiscal and taxation system should generally include the following aspects: re-dividing the powers and expenditure responsibilities between the local government, reforming the tax system, adjusting the proportion of tax sharing between the government and the local government, and improving the fiscal transfer payment system. The new round of fiscal and taxation system reform that is being planned this time should be a reform that links the above aspects.
There are two new backgrounds for planning a new round of fiscal and taxation system reform, one is that the reform must be planned and promoted around Chinese-style modernization. Chinese modernization is the modernization of common prosperity for all people. If the 1994 reform of the tax-sharing system focused more on efficiency, then the new round of reform of the fiscal and taxation system should place greater emphasis on fairness. Second, the local government has a tight balance of finances. Since most of the authority and expenditure responsibility are attributed to the local government, the local government has a lot to do, but the financial resources are relatively insufficient. In this regard, ** has continued to increase transfer payments in recent years. But even so, local finances are still tight.
To plan a new round of reform of the fiscal and taxation system, we should take into account the current and long-term, needs and possibilities, and persist in doing our best and doing what we can. On the one hand, to improve the local tax system and increase local tax revenue, the current idea is to gradually allocate consumption tax revenue to local governments, and at the same time move the collection link backward. At present, China's consumption tax is mainly levied in the production link, and then moved to the retail link, which will put forward higher requirements for the collection and management. On the other hand, adjust ** with local authority and expenditure responsibility, so that local authority and financial resources match. The author believes that the direction of the new round of fiscal and taxation system reform is to appropriately reduce the power and expenditure responsibility of the local government, and increase the power and expenditure responsibility of the local government accordingly. In addition, according to a survey by the Organisation for Economic Co-operation and Development, in 2020, transfer payments in 122 countries accounted for an average of 51 percent of local fiscal revenues5 per cent, of which less than 45 per cent in federal states and above 53 per cent in unitary states. In contrast, as a unitary country, China's transfer payment in 2022 accounted for 47% of the total local fiscal revenue, which is not high. Therefore, the author believes that the new round of fiscal and taxation system reform is more important than how to improve the transfer payment system, rather than increasing local tax revenue on a large scale.
Prospects for a new round of fiscal and taxation system reform.
Lu Bingyang, executive director of the Institute of Finance and Taxation of Chinese University and professor of the School of Finance and Finance.
There are five backgrounds for the new round of fiscal and taxation system reform: First, the downward pressure on the economy. In response to the downward pressure on the economy, the state has successively introduced a series of tax and fee reduction policies, which have played an important role in promoting economic development, but the space for fiscal policy is also shrinking. To mobilize the enthusiasm of business entities and promote economic development, it is necessary to rely on fiscal policy and the financial system to stimulate the vitality of all aspects. In the face of shrinking policy space, it is necessary to use the fiscal system to mobilize the enthusiasm of all parties. The second is to achieve the goal of common prosperity. The goal of common prosperity includes two dimensions: improving economic efficiency and promoting social equity, and the fiscal system has an important impact on this, so the reform of the fiscal and taxation system should take into account fairness and efficiency. The third is economic globalization. Economic globalization has intensified international tax competition, and the design of the tax system should consider improving the international competitiveness of enterprises and how to attract better talents. Fourth, the digitalization of the economy. The vigorous development of the digital economy has greatly changed the traditional economic form and brought challenges to the fiscal and taxation system. For example, the design of the tax system needs to take into account the needs of the development of the digital economy. The rapid development of the platform economy has brought about problems such as uneven distribution of regional tax revenue and the divergence of tax revenue from tax sources, which need to be solved through reform. Fifth, the population is aging. On the one hand, the aging of the population will lead to an increase in social security expenditures, and on the other hand, it will bring about a shift in the tax base, for example, after the aging of Japan, the tax base will gradually shift from labor income to consumption, and in this case, the fiscal and tax system will need to change over time.
Compared with the previous two reforms, the new round of fiscal and taxation system reform should play an important role in stimulating market vitality, stimulating local enthusiasm, enhancing fiscal sustainability, resolving local debt risks, and promoting fair income distribution for future economic and social development.
The reform of the fiscal and taxation system involves four aspects: fiscal revenue, budget, fiscal expenditure, and fiscal relations. In terms of fiscal revenue reform, involving the reform of value-added tax, consumption tax, individual income tax and preferential tax policies, consideration should be given to balancing the function of tax regulation and financing fiscal revenue, and the taxation of the digital economy should also be taken into account. With regard to the reform of the budget system, it is necessary to implement a comprehensive, standardized, open and transparent budget system, strengthen budget supervision by the people's congresses, comprehensively realize performance management, implement medium-term fiscal planning, and establish a cross-year budget balance mechanism. In terms of fiscal expenditure reform, it is necessary to optimize the structure of fiscal expenditure, improve the efficiency of fiscal expenditure, innovate the way of providing public services, and promote the construction of an expenditure standard system. In terms of fiscal relations, it is necessary to reform the method of sharing tax revenue, reform the fiscal system below the provincial level, and improve the local tax system and transfer payment system.
The reform of the fiscal and taxation system "learns from the past".
Wang Huayu, associate professor at Shanghai Jiao Tong University Kaiyuan Law School.
Whether it is the reform of the fiscal and taxation system of the tax-sharing system 30 years ago, or the major measures to deepen the reform of the fiscal and taxation system that has been continuously promoted since the 18th National Congress of the Communist Party of China, or the new round of fiscal and taxation system reform that is being planned, it has or will have a significant and far-reaching impact on the modernization of the national governance system and governance capacity.
It can be said that for a country like China, which has a large land and resources, a large population, and a relatively rapid economic growth, but whose development is still uneven and sufficient, the reform of the tax-sharing system implemented in 1994 has laid the basic framework of a scientific fiscal and taxation system, and has continued to affect all aspects of social development and national governance.
Planning and promoting a new round of fiscal and taxation system reform is not only an optimization and continuation of the achievements of the system and mechanism formed by the reform of the tax-sharing system 30 years ago, but also a major reform measure to start anew at a new starting point and promote Chinese-style modernization. The main purpose of the reform of the tax-sharing system implemented in 1994 was to increase the "two proportions", that is, the proportion of fiscal revenue in GDP and the proportion of fiscal revenue in the total national fiscal revenue, so as to establish a fiscal and taxation system that matched the economic and social development and macroeconomic environment at that time, and effectively enhance the state's fiscal absorption capacity. At present, China's economic and social development has entered a new stage, and the establishment of a fiscal and taxation system that adapts to the promotion of scientific and technological innovation, the development of the digital economy, and the provision of better and fairer protection of people's livelihood and well-being has become a new requirement of the times. Therefore, in the new round of reform of the fiscal and taxation system, it is necessary not only to solve the typical problems that have been reflected in the practice of the previous system, especially the long-standing problems, but also to optimize and improve the system according to the new stage of development.
The new round of fiscal and taxation system reform needs to continue to exert efforts in the budget, tax system and local relations, take the initiative to adapt to the requirements of high-quality development, and will be based on history and reality, coordinate the current and long-term, and establish a modern financial system that meets the requirements of Chinese-style modernization on the basis of effectively adjusting the relationship between the market and the local government.
Editor-in-charge: Tao Jiyan |Review: Li Zhen |Supervisor: Wan Junwei.
*: China Tax News).