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Original title: China’s macro tax burden has fallen to the lowest among the world’s major economies, and structural tax cuts will take center stage
When talking about the corporate tax burden, people often quote macroeconomic data on the tax burden.
The small-scale macroeconomic tax burden refers to the ratio of national tax revenue to national economic product, reflecting the government’s share in the distribution of national income and the relationship between government, businesses, and individual residents for occupy and control social distribution. means.
Generally speaking, the higher the macro tax burden, the more revenue the government will receive from the distribution of national economic income; on the contrary, the lower the macro tax burden, the more income will be received by companies and residents.
The tax burden in China falls mainly on businesses.In order to stimulate market vitality and reduce the burden on businesses, the July 2016 Politburo meeting proposed for the first time to reduce the macro tax burden. During the “13th Five Year Plan” period, large-scale tax and fee reductions were initiated, and the scale of tax and fee reductions basically showed an increasing trend year after year. Tax revenue growth has slowed significantly, while macro tax burdens have steadily decreased.
According to data from the State Administration of Taxation, the total scale of new tax and fee reductions during the period of the “13th Five-Year Plan” exceeded 7.6 trillion yuan. China’s macro tax burden decreased from 18.13% in 2015 to 15.2% in 2020, and the macroeconomic tax burden decreased by approximately 3 percentage points during the “13th Five-Year Plan” period.
Finance Minister Liu Kun said in an interview during this year’s National People’s Congress that, in recent years, my country has continued to implement tax cuts and tariff reductions, and that the relationship between tax revenue and GDP has continued to decline, and is currently at 15.2%. In the world economy, the ratio is the lowest, reflecting the benefit of the company and the people.
The macroeconomic tax burden has fallen to the lowest level among the world’s major economies, will it continue to fall in the future?
According to the China Business News analysis by many tax experts, the reduction in the macroeconomic tax burden reflects the downward trend of corporate burdens. At present, China’s macroeconomic tax burden is not high. Considering fiscal sustainability, there is limited scope for future decline.
Experts believe that the lower the macro tax burden, the better, and there is currently no consensus on a reasonable range of macroeconomic tax burden in the world. However, to examine whether the macroeconomic tax burden is reasonable, the most important thing depends on the type of public service that society wants the government to provide. Generally speaking, the higher the level of public service provided by the government, the government should collect enough tax revenue, so the higher the macro tax burden. If the government does not provide any public services, then the macro tax burden of 1% is considered high.
In recent years, the level of public services in China has continuously improved and spending on people’s livelihoods has only increased, accounting for more than 70% of fiscal spending. For example, the decisive battle against poverty has achieved an overall victory. During the period of the “XIII Five-Year Plan”, 55.75 million rural poor have been lifted out of poverty. China has created the world’s largest social security system, with basic health insurance covering more than 1.3 billion people and basic old-age insurance covering almost 1 billion people.
According to this year’s government work report and budget report, this year’s fiscal funds will continue to focus on areas such as people’s livelihoods, further improve the level of basic public services, and promote equalization of resources. basic public services.
For example, continue to increase the basic pension for retirees. Intensify investment in public health, among which the per capita financial subsidy standard for resident health insurance has been increased by 30 yuan to reach 580 yuan per person per year. The per capita financial subsidy standard for basic public health services was raised by 5 yuan to 79 yuan per person per year.
During the XIII Five-Year Plan period, large-scale tax cuts and tariff reductions have reduced the burden on businesses, but at the same time reduced tax revenues, aggravated the contradiction between tax revenues and expenditures, and have faced greater fiscal challenges. sustainability. Due to the long-term implementation of previous institutional tax and fee reduction policies, such as value added tax, personal tax, and social security premiums, the effect of reducing corporate burdens will be more evident in the future. Therefore, this year China has paid more attention to fiscal sustainability and has not raised the scale of reducing taxes and fees for the first time.
Shi Wenwen, a professor at the China University of Political Science and Law, told CBN that compared to the scale of tax cuts of more than 2 trillion yuan in the previous two years, this year’s scale is relatively small. However, due to the continued implementation of institutional tax and fee reduction policies, as well as recently introduced tax reduction policies for small and micro enterprises and manufacturing industries, tax reductions are more accurate and effective.
Although inclusive and large-scale tax and fee cuts are difficult to sustain, structural tax cuts will become the focus of future work.
According to the “14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Outline of Long-Term Objectives for 2035”, the modern tax system will be improved during the “14th Five-Year Plan” period. These are reforms related to the value added tax, the personal tax and the consumption tax.
Several tax and tax experts told China Business News that the future tax reform will continue to reduce the tax burden of low- and middle-income people and adequately strengthen the collection and management of high-income people. The deepening of the reform of the value added tax will continue to advance, focusing on reducing the tax burden of the manufacturing industry and consolidating the supply chain of the industrial chain. The scope and tax rate of the excise tax will also continue to be adjusted to guide consumption in a reasonable manner.
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Editor-in-Chief: Zhang Yanan
