Abstract: At present, China's individual income tax has institutional defects in regulating personal income, alleviating unfair social distribution and increasing fiscal revenue. This paper aims at some main defects of the current personal income tax system and puts forward my humble opinion on the reform of the personal income tax system.
Keywords: personal income tax model; Progressive tax rate; Expense deduction standard; Taxable income
Personal income tax was founded in Britain from 1799, and has a history of more than 200 years. Now it is widely used by countries all over the world and has become the most important tax source in developed countries. 1980, China promulgated the Individual Income Tax Law of People's Republic of China (PRC), and levied individual income tax for the first time. Since then, it has undergone two revisions, and the tax-sharing reform of 1994 promulgated and implemented the current personal income tax. Since its operation, the personal income tax system has played an active role in regulating personal income, alleviating unfair social distribution and increasing fiscal revenue. However, due to the change of social and economic environment, the lag of tax system construction and the lack of tax collection and management, the due function of personal income tax in China is far from being fully exerted, and tax evasion is quite common and serious. Under this background, it is of great and urgent practical significance to discuss personal income tax and conceive the reform and perfection of personal income tax related systems.
State evaluation of 1
(1) The tax revenue is growing rapidly, but the proportion is too low. During the eight years from 1994 to 200 1, China's personal income tax has grown rapidly, which is manifested in the rapid growth of income and the increase of its proportion in fiscal revenue. 194 personal income tax was 7.267 billion yuan, and it reached 99.599 billion yuan (including bank deposit interest tax) in 200 1 year. Accounting for 1.39% of the national fiscal revenue in 1994, it rose to 6.08% and 5438+0 in 2006, with an average annual growth rate of over 40%. Personal income tax has become the fastest growing tax since the reform of 1994 tax system. Although in absolute terms, personal income tax revenue has grown rapidly, due to the constraints of China's tax structure, the proportion of personal income tax revenue in fiscal revenue has not yet reached 7%. Compared with other countries, China's personal income tax is in a weak position. In terms of quantity, personal income tax in OECD countries accounts for more than 25% of the total tax revenue. According to relevant data, even in most low-income developing countries in the world, personal income tax accounts for 6% ~ 65438.
Small accountant 2008-03-0112:18
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(2) The adjustment of high income is weak and the tax loss is serious. According to the statistics of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC), in 2000, the individual income tax payment in China was as follows: wage income accounted for 42.86%, individual industrial and commercial households accounted for 20. 12%, contracted leasing business accounted for 3. 19%, labor remuneration accounted for 2.09%, interest, dividends and bonuses accounted for 28.7%, and other income accounted for 6544. Accidental income accounts for 1.29%, and 0.6 1% comes from royalties, property leasing and property transfer. 200 1, the proportion of wage income rose to about 50%, while in Shanghai, Beijing, Xiamen and other places it was as high as 60% or more. From the above situation, personal income tax mainly comes from wage income, which mainly comes from enterprise book wages and bonuses. Bonuses and welfare subsidies other than wages are difficult to tax; In addition, high-income items such as labor remuneration, royalties and property leasing have less taxes, so it is difficult to grasp the source of income and the adjustment is not enough, which makes some high-income income income not really enter the scope of taxation. For a long time, it has been very difficult to tax high-income people. According to the statistics of Guangdong province, in 20001year, the personal income tax in the province was 8.469 billion yuan, of which the tax from high-income earners only accounted for 2.33%, and tax evasion was quite common.
2 Cause analysis
The above situation shows that the potential of personal income tax in China is far from being brought into play, and the reasons that affect the income tax function are not entirely in the system itself, but it is absolutely necessary to analyze its reasons from the system.
(1) The classified income tax system is flawed. The classified income tax system means that all kinds of income or part of income of the same taxpayer, such as wages, dividends or operating profits, are taxed at different tax rates. This model is convenient for source tax deduction, and has the advantages of simple taxation and low collection cost. When most people's income mode is relatively simple and their income level is low, this mode is suitable. However, when residents' income sources are diversified and their income is gradually rising, it is difficult to control the tax sources and measure the real tax paying ability of different taxpayers by adopting classified income tax. China's current personal income tax is based on this model, which is divided into 1 1, and the tax rate ranges from 5% to 45%. With the development of social economy and the change of personal income distribution pattern, its defects are becoming more and more obvious: 1) It is impossible to comprehensively measure the real tax paying ability of different taxpayers by summarizing the income from different sources on a monthly basis or by time. People with scattered income sources but high comprehensive income may pay less taxes than those with concentrated income sources and low total income, and it is difficult to adjust the income of truly high-income people. 2. Taxes shall be calculated on a monthly basis or by time, but not summarized at the end of the year, which is likely to lead to tax avoidance. Taxpayers can "legally" pay less or no taxes as long as they disperse the income originally collected at one time.
(2) The provisions on expense deduction are divorced from reality. In China, personal income tax is paid after deducting net income and fixed expenses. Theoretically speaking, the problem of expense deduction should be divided into two parts: the first part is the expenses that must be paid to obtain income, so as to reflect the characteristics that income tax is a tax on income; The second part is the basic needs of life, which should be treated separately according to the actual burden of different taxpayers. At present, the expenses of personal income tax in China are comprehensively deducted, and the method of combining fixed deduction and fixed deduction is adopted. This deduction method does not fully consider the various burdens of taxpayers, especially the fixed deduction. Under the current tax system, the monthly deduction standard for personal income tax on wages and salaries is 800 yuan, which is obviously low. According to the data of the National Bureau of Statistics, during the period of 1994-2000, urban consumer price index increased by 29.57%. According to this index, the deduction of necessary expenses in 2000 should be 800× (1+29.57%) =1036.56 yuan. The results show that price changes make some low-income people enter the ranks of taxpayers, and a large number of low-income people enter the ranks of taxpayers, which not only violates the principle of fairness, but also reduces tax efficiency and increases the cost of tax collection and management.
Small accountant 2008-03-0112:19
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3) The tax rate design needs to be optimized. At present, China's personal income tax rate takes two forms: progressive tax rate and proportional tax rate. Income from wages and salaries is taxed at a 9-level excess progressive rate, ranging from 5% to 45%, income from production and operation of individual industrial and commercial households and income from contracted leasing of enterprises and institutions is taxed at a 5% to 35% excess progressive rate, and the rest of the itemized income is taxed at a proportional rate of 20% (3% ranging from 20% to 40% if the income from labor remuneration is abnormally high). The problem with this tax rate design is that the highest tax rate of 1 wage income is 45%, which is higher than other countries in the world. On the one hand, high tax rate will increase taxpayers' motivation to evade taxes; On the other hand, because the 45% tax rate is rarely used in practice, the nominal tax rate is high, the actual tax rate is low, and the tax collection effect is poor. In addition, there are too many levels of wage income. Nowadays, the personal income tax reform in all countries in the world aims at expanding the tax base and reducing the cumulative level. For example, the personal income tax rate in the United States, Britain and Brazil is only 1-3, while this income tax rate in China has 9 levels, which is neither in line with the reform direction of simplifying the tax system nor divorced from reality. At present, the income tax from the production and operation of individual industrial and commercial households and the income tax from the contracted leasing operation of enterprises and institutions are low. According to the five-level progressive tax rate of 5% ~ 35%, the tax rate of annual taxable income (annual total income-cost-expense-loss) is 5%, and the tax rate of annual taxable income above 50,000 yuan is 35%. However, the monthly taxable income (monthly income -800 yuan) of 50,000 yuan is taxed at the rate of 30%, which shows that the marginal tax rate of individual industrial and commercial households is too low, and the tax rate design tends to emphasize wage earners, so it is difficult to achieve the purpose of protecting low-and middle-income people, adjusting high income and alleviating personal income gap.
(4) The tax base is not wide enough. A basic trend of individual income tax reform in developed countries in the middle and late 1980s is to expand the tax base and bring some original tax relief items into the scope of taxation. However, China's current individual income tax law adopts the provision of listing specific items corresponding to taxable income, which is difficult to cover all taxable items. In addition, because there are too many tax-free and preferential items, the expenses are deducted by stages, which objectively reduces the tax base.
3 reform ideas
(1) Implement a classified comprehensive income tax system. Looking at the taxation modes of individual income tax in the world, in addition to the classified income tax system mentioned above,
There is also a comprehensive income tax system, that is, all kinds of income of the same taxpayer, no matter where their income comes from, are treated as a whole and taxed at a progressive rate. The advantage is that it can reflect the fairness of tax, but it has higher requirements for tax declaration and income settlement. In view of the low level of tax collection and management in China, taxpayers' tax awareness is weak, so it is not appropriate to adopt the comprehensive income tax system, but it can be gradually transferred to the comprehensive income tax system, so it is most appropriate to adopt the classified comprehensive income tax system at this stage. This tax system model is formed by combining classified income tax with comprehensive income tax. With this model, based on the current income classification, classified tax can be levied at different tax rates by withholding at the source. After the end of the tax year, taxpayers declare their comprehensive income for the whole year, which is approved by the tax authorities, and the tax payable is uniformly calculated according to the prescribed progressive tax rate, and the tax paid for the whole year is adjusted. The benefits of doing so are very obvious: 1 fully reflects the income level and tax payment ability of taxpayers in a certain period (one year), and embodies the fair principle of taxation according to ability; Avoiding the loss of tax sources or lowering the applicable tax rate due to income diversification can not only increase the national fiscal revenue, but also have a greater impact on the income of high-income people.
Small accountant 2008-03-0 1 12:20
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2) Improve the deduction policy and determine the reasonable expense deduction standard. Perfecting the deduction should benefit the low-income class, exclude it from the ranks of taxpayers, and reduce the loopholes of tax evasion for high-income people. The feasible way is to re-establish the tax deduction standard and appropriately improve the basis of people's livelihood deduction. Therefore, when determining the deduction of expenses, in addition to the basic deduction, we should also consider the deductions of pension, medical insurance, unemployment insurance and housing accumulation fund, so as to link this reform with the pension, medical insurance and unemployment insurance systems; Moreover, to determine the amount of expenses deduction, we should also comprehensively consider the taxpayer's family situation and my affordability. Employees with the same income for two months, one has a heavy family burden and one is not married. If the same expense deduction method is adopted, the personal income tax system will inevitably violate the principle of social equity, that is, it requires that the personal livelihood deduction be determined according to the taxpayer's marital status, actual burden, number of dependents and age. According to the current income level, the taxpayer's livelihood deduction should be increased from 800 yuan/month to 1.6 million yuan/month (total 1.8 million yuan/year). This standard is more appropriate, which can not only achieve wider coverage, but also ensure that the per capita disposable income of a family of three employees is around 500 yuan (6,000 yuan per year), which is basically the same.
(3) Optimize tax rate and reasonable tax burden. As the tax rate structure is the most important factor affecting the degree of tax leverage, it will affect the tax burden and progressiveness of individual income tax, so it is very important to design a reasonable tax rate structure, which needs to be considered in the specific operation: 1 Follow the international practice, divide income into labor income and non-labor income, declare them separately, apply different progressive tax rates respectively, and stipulate a higher progressive tax rate for the latter. At present, the fact in our country is that the source of personal income tax is too biased towards wage income from labor income, while the light tax policy is not conducive to achieving the goal of fair distribution. 2. Adjust the tax rate range. On the basis of expanding the comprehensive tax items as much as possible, combine the two excess progressive tax rates of personal income tax into one, implement the excess progressive tax rate of 5% ~ 35%, and pay taxes according to the unified excess progressive tax rate to balance the tax revenue; In addition, in order to strengthen the regulation of high income, an additional levy measure can be added, that is, the tax rate of 5% ~ 35% remains unchanged, but when the income exceeds a certain standard, it will increase to 10% ~ 20%. In this way, no matter what method is adopted, high-income people can pay more taxes.
(4) Expand the tax base. In order to effectively expand the tax base and adapt to the diversification of personal income sources, the taxable income of the current personal income tax includes all income that can measure the ability to pay taxes, and the taxable income is changed from the current positive enumeration method to the anti-enumeration method to the non-taxable items. In addition, according to China's national conditions, the items that can be reduced or exempted should include: 1 unemployment benefits and other benefits, pensions and insurance claims; Income from tax exemption for diplomatic representatives, foreign affairs officials and other personnel of embassies and consulates in China according to law; According to international practice, the tax-free income stipulated in international conventions and agreements signed by the government of China; Income exempted from tax with the approval of the State Council and the Ministry of Finance.
4 supporting conditions for reform
Establish a personal property registration system, define the legitimacy and rationality of the source of personal property, and make the taxpayer's property income explicit. Implementing and perfecting the real-name registration system for savings deposits will, to a certain extent, overcome and solve the problem of opaque, undisclosed and irregular tax sources. 3. Implement a fixed life tenure system for resident number and taxpayer number, and implement a real-name registration system for financial assets where conditions permit, creating favorable conditions for tax authorities to grasp personal income. 4. Strengthen the taxpayer's self-declaration system and establish a collection and management mode combining withholding and self-declaration. In short, with the development of China's socialist market economic system, it is inevitable that personal income tax will continue to increase, but at the same time, the deep-seated contradictions of the personal income tax system are increasingly prominent and cannot be ignored. For the long-term development of the national economy and the maintenance of social stability, the state needs to take a series of targeted measures to reform and improve the individual income tax system and strengthen tax collection and management. Only in this way can we give full play to the potential function of personal income tax.
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