A discussion on China's personal income tax status and direction of reform

Papers network: [Abstract] personal income tax increasing depth at all levels of society, a tax in China accounted for a low proportion of total tax revenue collection and management system to be sound and adjusting the gap between the rich and the poor in our current personal income reduced, tax evasion and avoidance are quite serious, taxes in need of reform. To this end, the direction of China's personal income tax reform: expand the tax base, tax system, improve the system of pre-tax deductions, established families and individuals tax return body; establish a two-way reporting system and the reform of the personal The proceeds of the tax.

[Paper Keywords] personal income, tax status, tax reform


By the end of June 2011, the 21 meeting of the National Eleventh Standing by the decision to modify the personal income tax: exemption amount of wages and salaries increased by 2,000 yuan per month to 3,500 yuan, the tax rate adjusted from 9 to 7, the lowest file tax rate from 5% to 3%. This will significantly reduce the tax burden on low-income people, the personal income tax system reform in China has already begun.

First, the definition of personal income tax

The personal income tax is to adjust the tax authority and natural persons (residents and non-residents in the personal income tax levied for the management process between the legal norms of the social relations general who have domicile in China, or has no domicile in Chinese territory the residency year personal income made from the inside and outside of China, and has no residence in China nor resident or non-residence in the territory of living less than one year personal income from sources within China are personal taxpayers of income tax. classification individual income tax system, personal income tax in China to obtain the personal is divided into 11 categories of wage and salary income, operating income of individual industrial and commercial households.

China's personal income tax situation and existing problems

On the basis of the personal income tax system in 1980, China's current personal income tax system around the threshold through several revisions evolved a tax levy for more than 30 years has made certain achievements, but along with China's economic takeoff, prices continuously improve the level of the increasingly prominent defect of personal income tax. Currently, the main problems of a tax for a tax accounted for a low proportion of total tax revenue, the tax base is narrow, lack of scientific expense deduction, unfair, collection and management system to be sound, tax evasion evasion is more serious, the function of adjusting the gap between the rich and the poor gradually weakened.

(A tax accounted for a proportion of the total tax revenue is too low

More than 30% of the personal income tax for high-income countries in the world, the proportion of total tax revenue in the United States early in 1994 reached a level of 43.16%, while the average is also about 15% of the developing countries, the proportion of tax but China 1998 tax accounted for only 3.4% of the total annual personal income tax accounted for, in 2009 this proportion increased to 6.64%, compared with the above international level there is a large gap between the neighboring countries, such as South Korea, Thailand, India, Indonesia, and the proportion of (generally in between 10-20% more than our level of a tax revenue in a fairly long period of time, become the main source of income of the country is not yet reality, but with the changes in the distribution of national income, the contribution of a tax should be gradually improved. proportion of total tax revenue, a tax accounting is too low, is worrying.

(Two tax base is narrow the expense deduction lack scientific, unfair

China present a tax classification taxed mode narrow benchmark upcoming taxable income is divided into wage and salary income, production and operating income of individual industrial and commercial households, the contract for management of the enterprises and institutions, lease operating income, income from remuneration royalties income, royalties, income, interest, dividends, bonuses, lease of property, transfer of property from incidental income tax determined by the financial department of the State Council obtained the 11 categories of taxable income. levied mode is simple, were withheld at the source, suitable for small and a single source of income of reform and opening up. However, with the socio-economic development and diversification of sources of income taxpayers and complicated, if not timely adjustments to the classification of a tax, flexible, science taxed prone multi levy, disorderly phenomena. Currently, the tax deductions generally only consider personal day-to-day expenditures, to ignore the impact of family-related factors, geographical income differences, the burden on the working-class, it is difficult to realize the principle of fairness of the tax the same time, the rapid economic situation, personal ability to pay expense deduction standard long-term impact. unchanged, lags behind the changes in the economy, today's inflation, individual spending rose, the crowd enjoy low tax burden had to bear a higher tax burden.

(Three collection and management system to be more serious sound, the phenomenon of tax evasion

In all types of taxes, a number of tax payers up, collection and management of workload is quite large, must have a stringent collection and management system to ensure Currently, our tax levied for or withhold-based, self-declaration, supplemented by pay units from taxable income withheld at source by the withholding agent to withhold no withholding agent, tax self-declaration by the taxpayer. This tax is way vulnerability only nine rate grade The first four actual rate of grade generally use five tax rates set for less than 10% of high-income earners, a maximum rate of 45% is basically useless. The higher the tax rate, taxed, especially high-income people, the more intense the motives of tax evasion, and so there is a split-up, in-kind bonds, equity allocation of tax evasion and other phenomena, and repeated. According to the China Financial Report >> << China Economic Monitoring Center in conjunction with CCTV survey of seven hundred residents of Beijing, Shanghai, Guangzhou and other places, only 12% of residents surveyed claimed to pay personal income tax, 24% of respondents the residents admitted only paid partially or completely non-payment of personal income tax, tax evasion and avoidance serious reason mainly lies in the self-declaration system is not perfect, the withholding system difficult to implement, collection and management methods are backward, it is difficult to ineffective tax department collection and management transmission of information is not accurate, timeliness is poor, the lack of substantive cooperation with other relevant departments (such as tax silver networking, the State tax networking, the lack of a nationwide unified information sharing and information planning, law enforcement level is not high, has not yet formed The computer network is relying on modern technological means. these to some extent on the impact of the tax levy.

(D regulate the function of the gap between the rich and the poor gradually weakened

Class to pay personal income tax in our country, in the middle of the income sources mainly rely on wages and salaries accounted for 46.4% of all personal income tax revenue, the upper strata of the major groups as the personal income tax paid (including the private fortunes boss in the reform and opening up, the singer truly rich groups of the movie star, star, and building contractors to pay personal income tax accounts for only about 5% of the total personal income tax revenue. regulatory role of the tax gap between rich and poor narrowed. reason mainly lies in diversification of revenue streams citizens cash income more illegal income without banks, tax authorities is difficult to clear the actual income of the taxpayer.

Third, the establishment of modern China's personal income tax system

Produced significant changes in the late stage of economic transition, under the guidance of the principle of "giving priority to efficiency with due consideration to fairness", China's personal income distribution pattern, personal income distribution gap unreasonable further exacerbated for easing social income distribution unreasonable, mainly Western countries The personal income tax to be regulating, the government actively regulate the distribution of income. establishment of modern China's personal income tax system, in order to adapt to the economic development and the government's macro-control is imperative.

(A) to expand the tax base, optimize the tax

1 to expand the tax base of the personal income tax. First, determine the various income, including wages and income, also include other tangible proceeds from both the currency income, also including the the recessive various allowances, treatment proceeds. Secondly, defined allow the tax base within the context of giving concessions and tax-exempt income items, personal income, the income of the other various channels together included paying personal income tax.

Simplify the tax rate level. Modern Western countries based on the theory of optimal taxation under Asymmetric Information, commonly used to simplify the tax rate level, such as the United States in 1986 to simplify the personal income tax rate level, the tax rate determined by the United Kingdom only two basic grades, namely 20% and 40 % from the theory of marginal utility to reduce the tax rate level, namely to reduce the marginal tax rate difference level, select the marginal utility of the tax rate to avoid the taxpayer in the tax collection process. simplified for China's personal income tax, the tax rate level of around four to raise the marginal tax rate, that follow low tax rates and broader tax ideas for tax reform, to improve the regulation and control of the personal income distribution gap.

Simplification of the tax system. Implementation of comprehensive tax system requires taxpayers to understand and master the tax system and tax reporting requirements in accordance with the tax system, which not only requires taxpayers to tax returns, and require tax straightforward. Thus, the tax system must be as simple as possible, clear, transparent and easy to operate. posted in the free papers Download Center http://eng.hi138.com
integrated collection system in order to reduce the tax burden of low-income, to ensure the fairness and reasonableness of the tax, tax comprehensive and classified the combination of an integrated tax system so, both to cover all personal income, to avoid the classification of the income tax system possible loopholes, but also conducive to the progressive income of the individual for reasonable deductions and comprehensive collection, reduce personal income tax for low-income, nurture the middle-income class, and strengthen efforts to regulate levied on high-income earners. further matched with personal insurance, education reform, the implementation of an integrated system, the promotion of personal income distribution more reasonable regulation.

(B perfect pre-tax deduction of system

For fair taxation, the principle of "capacity to pay" taxes required to make the necessary deductions the taxpayer's ability to pay before tax to be deducted before tax from the following aspects, in order to adapt to the social price index changes in a timely manner.

1. Complete reasonable pretax personal income tax deduction of the system, given the variety of the necessary deductions directly on the taxable income of low-income, such as dependency deduction, elderly taxpayers' medical expenses, social insurance deduction, allows the individual to the community charities and public welfare donations to give tax incentives to encourage high-income earners enthusiastically donated indirectly increase the income of the lowest income groups, to adjust the gap between personal income distribution. taxable items under the current personal income tax system only part as a monthly income of less than $ 800 the deduction base of taxable income, do not take full account of the specific circumstances of the taxpayer's too simple, it is difficult to reflect the amount of energy the principle of burden.

2. Adapt around the personal income and living conditions of the pre-tax standard deduction to ease the contradiction of the personal income gap between regions, allowing the economically developed areas and backward areas in the establishment of a unified national comprehensive and reasonable personal income tax on the basis of the tax deduction system unified national legal standard deduction, based on the local price index, the consumer price index plus or minus a certain percentage to specify the specific implementation of the cost of the standard deduction, the standard deduction is lawful, reasonable and sensible.

(C established the main tax returns for families and individuals

At present, China's personal tax declaration of the main Western developed countries, the main tax return diverse, can be personal, can be a family, even the couple were reporting more family is the main unit of the tax returns from obtaining income point of view, the declaration of no essential difference between reporting the individual and the family, but from the perspective of the tax regulation of social income distribution, people's consumption, savings, investment and the transfer of property is often the family unit, The broader impact of family taxation.

(Four to establish a two-way reporting system

To strengthen the effective monitoring of the personal income tax revenue, modern personal income tax system generally implement two-way reporting, that taxpayers both self-declaration of declare gone taxpayers pay income units. The taxpayer reporting both single income, should also be employers or their work units will pay year-end summary reporting this double source of the taxpayer's income status monitoring, on the one hand, tax law requires taxpayers truthfully declare their annual income to the tax authorities a comprehensive, on the other hand requires taxpayers truthfully declare to the taxpayer's income and wages to the tax authorities. comparing the taxpayer's self-declaration and employers where the units reporting income tax department, from which more precise grasp of the authenticity of the taxpayer's tax return.

Fourth, improve the collection and management tools to improve the level of tax collection

(A strengthening of the monitoring of the sources of revenue

Personal property as soon as possible to establish real-name registration system requires all commercial banks to check identification, personal accounts in personal income through the bank accounts of the settlement, to minimize the use of cash, must explicitly turn on various income units or individuals into personal the relationship between the source monitoring personal income.

(Two to speed up the construction of tax information

Of in building tax information has made great strides, the Golden Tax Project to carry out the role of tax collection in China is huge Golden Tax Project internal tax authorities and not networked to share information with other state organs. not enough. imperative that the various departments of taxation and finance, insurance, industry and commerce, customs information sharing.

(Efforts to increase the Franco-Prussian, severely punish illegal

Strengthen the tax law publicity, let every citizen know French, knowing, and enhance the awareness of citizens' awareness of the tax law, the use of large, important cases of the deterrent effect and the influence of negative warning. Establish a tax illegal and the integrity of files, using the geometric growth in a progressive manner The number of their punishment, increase the penalties for violations.

In summary, compared to the world level, the current personal income tax system in the early stage of the reform is imperative. Raise the personal income tax deduction of expenses standard and adjust the personal income tax rate level secondary pitch, strengthen regulatory means of personal income tax, and gradually transition to an integrated tax system by the classification of the tax system to narrow the gap between the rich and the poor, China's economic development, people's livelihood improved, the stability of the social significance of important Links to free papers Download Center http://eng.hi138.com

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