One, the basic function of modern personal income tax is to raise revenue, not to regulate income distribution
Theoretically, personal income tax has two major functions: one is to raise revenue, and the other is to regulate income distribution. Logically, the two functions are not juxtaposed, the revenue function is the premise and condition of the regulation function, the former is basic, the latter is derived and subordinate. In the process of raising revenue, the regulatory function has the space to play; only the revenue function is fully realized, the regulatory function has enough strength.
From the world trend, with the changes in the structure of economic industry and national income distribution, personal income tax has gradually become the main source of fiscal revenue in the West. According to the World Bank statistics, the proportion of personal income tax in the fiscal revenue of high-income countries is mostly above 40%, and the proportion in middle-income countries is basically 10%-20%. Taking the United States as an example, personal income tax only accounted for 0.3% of the total fiscal revenue in 1902, reached 6.7% in 1932, and 8.1% in 1940; from 1950 onwards, the proportion rose significantly to 29.3%, and then stabilized at the level of more than 30%, and reached 45.37% in recent years, which can be seen that the importance of the contribution of personal income tax to the government's revenue. The position of personal income tax in China's tax system is also becoming more and more important. Since the implementation of the new tax system, the income from personal income tax has shown a trend of rapid growth. In 1994, the income from personal income tax amounted to 7.27 billion yuan, and rose to 318.498 billion yuan in 2007, with an average annual growth rate of 33.74%, which is one of the fastest-growing taxes during the same period, and has become an important source of China's fiscal revenue. However, compared with western countries, the proportion of personal income tax in our country is less than 10% of the total tax revenue, and the function of raising fiscal revenue has not been fully realized, making it difficult to bear the heavy responsibility of regulating income distribution. If we substantially increase the pre-tax deduction standard of personal income tax, it will only result in a substantial reduction of personal income taxpayers, a substantial decline in personal income tax revenue, and it is difficult to fulfill the function of personal income tax to raise fiscal revenue, and its role in regulating income distribution and improving the structure of the tax system is undoubtedly to fill up the cake with hunger. From this point of view, the function of personal income tax to raise revenue can only be strengthened, can not be weakened, and the pre-tax deduction standard of personal income tax should not be set too high.
Second, the pre-tax deduction standard should protect the basic living needs of residents, rather than all consumer spending
From the practice of countries around the world, the pre-tax deduction standard varies considerably, but its **** the same point can be summarized in two aspects: one is to obtain the necessary cost of the income taxable income paid for the costs of the expense (i.e., expense deduction); the second is to support the taxpayer's own and his family members' minimum The second is the minimum cost of living (i.e. livelihood deduction) for supporting the taxpayer and his family members. It can be seen that the international practice is to deduct the basic living expenses of the residents before tax, and the part that exceeds the basic living expenses is included in the scope of taxation to ensure that the basic livelihood of the taxpayers will not be affected. In developed countries, personal income tax deduction of basic expenses accounted for the proportion of per capita income is usually lower, generally 20%-30%, while developing countries are generally 30%-50%.
Drawing on international experience, China's personal income tax deduction standard should consider the following factors: First, the basic livelihood expenses. Since the extension of basic living expenses is constantly expanding, the content of basic living expenses should be grasped dynamically. The second is the inflation factor. For example, the consumer price index in 2006 was 80% higher than in 1993, and the pre-tax deduction standard should be appropriately adjusted according to the price situation and the basic living expenses of residents in different periods. The third is the reform of the housing, medical care, education, unemployment and pension systems related to the reform of the income distribution system. In the past decade, these areas of reform to industrialization and market-oriented tilt, the vast majority of residents in these areas of expenditure has risen faster, pre-tax deductions should take into account the taxpayer's family support, the burden of fostering, old age pensions, medical insurance premiums, unemployment insurance premiums, housing insurance premiums and so on to be expanded.
Taking the national average per capita consumption expenditure of urban households as the basis for calculating the basic livelihood expenditure, in 2005, the national average per capita consumption expenditure of urban households was 7,922 yuan (consumption expenditure refers to all the expenditures used for daily life, including eight major categories of expenditures, such as food, clothing, household equipments, goods and services, medical care, transportation and communication, recreation, education, and cultural services, housing, miscellaneous goods and services, etc.). (Consumption expenditure refers to all expenditures for daily life, including food, clothing, household equipment and services, medical care, transportation and communication, entertainment, education and cultural services, housing, miscellaneous commodities and services, etc.), and the national average coefficient of support for each employed person in cities and towns is 1.96 (including the cost of living for supporting the elderly and raising children). The current personal income tax expense deduction standard is 2,000 yuan/month, which is basically in line with the reality of the rise in consumer spending and price index of China's residents in recent years.
Thirdly, to raise the standard of expense deduction, we should not only consider the need of taxpayers to reduce the burden, but also take into account the fiscal affordability
At present, the burden of personal income tax in China, especially the level of marginal burden is on the high side, and it is necessary to appropriately adjust the tax rate and the standard of expense deduction. However, from the point of view of fiscal affordability to observe, personal income tax deduction standard before tax should not be too high. The main reason is that too high a pre-tax deduction standard will not only increase the fiscal burden, but also be unfavorable to the implementation of macro-control and the deepening of the reform of the fiscal and taxation system. According to the estimation, after raising the deduction standard to 2,000 yuan in March 2008, the proportion of wage earners who need to pay personal income tax on wages and salaries has dropped to 30%, and the tax base has been greatly reduced. On the contrary, in developed market economy countries, an important reason why personal income tax can become the main tax is that the tax base is wider. If the pre-tax deduction standard for personal income tax is raised significantly, it will cause a significant drop in personal income tax revenue, coupled with a series of factors such as the merger of the two laws on enterprise income tax, the value-added tax transition reform, and the frequent natural disasters in recent years, which will reduce revenues and increase expenditures, resulting in an overburdening of the treasury. If this issue is not handled well, it will certainly affect the introduction and implementation of various national reform measures, especially the current implementation of China's proactive fiscal policy, the pressure on fiscal expenditure has increased sharply, and it is particularly important to raise the standard of expense deduction.
Four, the adjustment of the expense deduction standard should be conducive to alleviate the differences in regional development, and should not exacerbate the distribution of contradictions
China's economic development in the dualization and diversification of the characteristics of the obvious, the price level of different regions, the level of consumption and the residents of the basic degree of satisfaction with the life of the different, some people have proposed that the personal income tax deduction standard should take into account the differences in the level of income and consumption in the region to give the local provinces and municipalities to adjust the appropriate authority. Some people suggest that the deduction standard for personal income tax should take into account the differences in regional income and consumption level, and give local provinces and municipalities appropriate authority to adjust the deduction standard. We think that this viewpoint takes care of the local specific situation and vested interests, but it is against the goal of horizontal equity of personal income tax, and the deduction standard should be a unified standard for the whole country, for the following reasons: Firstly, China's personal income tax has already been changed from a local tax to a *** enjoyment tax, and it is inevitable to require a high degree of unification of legislative power. Secondly, the adjustment of the deduction standard is only a part of the reform of the personal income tax system. If the deduction standard varies from place to place, it may affect the further reform of the personal income tax and even other tax systems. Thirdly, if there are regional differences in the personal income tax system, it may have a reverse regulating effect on the flow of factors of productivity (such as capital, talents and technology), which will make the capital and talents flow excessively to high-income areas, weakening the functional role of personal income tax in regulating regional income differences and adversely affecting the implementation of China's strategy of balanced regional development.
Fifth, optimize the pre-tax deduction project, to be conducive to "bigger" personal income tax, improve the tax structure
In the tax system of economically developed countries, personal income tax is mostly the main tax, the main source of revenue in the country at the same time, but also is the government's main means of regulating income distribution. However, our country is still taking turnover tax as the main tax tax structure, value-added tax, consumption tax, business tax, three accounted for more than 60% of the proportion of tax revenue, while the personal income tax revenue scale is small, less than 8% of the annual tax revenue, accounting for less than 1% of the GDP, to a certain extent, limiting the effectiveness of the personal income tax to regulate the redistribution of national income. We believe that a decisive factor in whether personal income tax can be built into the main tax in China's tax system is to broaden the tax base. This requires simplifying and cleaning up the pre-tax deductions, reincorporating the income previously excluded from the tax base into the comprehensive income, and eliminating or reducing certain specific tax deductions. If there are too many and too detailed pre-tax deductions, many taxpayers do not have the ability to fill out the forms and calculations, it will greatly increase the cost of tax collection and the cost of taxpayers' bungling.
Sixth, improve the personal income tax deduction standard, to be conducive to enhancing rather than weakening the taxpayer's concept of tax obligations
In the personal income tax system change, must enhance the citizen's awareness of the tax as a goal, and appropriate personal income tax deduction standard is to enhance the citizen's awareness of the tax is an important way. Individual income tax can become the main tax of the market economy countries, become the main means of income distribution, is closely related to the formation of its citizens' tax consciousness. Due to the differences in historical and cultural traditions, the tax consciousness of our citizens is relatively low, and the pre-tax deduction standard for personal income tax has a positive effect by raising it from 800 yuan in 1994 to 2,000 yuan nowadays, but it does not exclude that objectively it will have a certain negative effect on further enhancing the tax consciousness of the citizens: on the one hand, the group of people who need to pay taxes is greatly reduced in absolute number; on the other hand, the narrowing of the group of taxpayers On the other hand, the shrinking of the taxpaying group makes the scope of social influence of taxpaying behavior shrink in multiples. Therefore, the standard of pre-tax deduction for personal income tax should not be too high, so as to gradually increase the number of personal income taxpayers in China, which is not much, and is conducive to the cultivation and strengthening of the concept of taxpayers' tax obligations.
(Author: Zhongnan University of Economics and Law)
Responsibility Fang Zhenhai