At the same time, with the rapid development of the economy and the substantial growth of fiscal revenue, the national fiscal revenue exceeded 1000 billion yuan for the first time in 1999.
After entering the new century, the fiscal revenue has achieved a continuous leap, reaching 11725.4 billion yuan in 2012. Since the 18th National Congress of the Communist Party of China, fiscal revenue has continued to grow rapidly, reaching 18,335.2 billion yuan in 2018, an increase of more than 2,950 times compared with 1950.
According to the data of the National Statistical Bureau, the national fiscal revenue increased by 12.5% annually from 1951 to 2018, with an average annual growth of 13.6% from 1979 to 2018, providing a strong financial guarantee for promoting economic development and improving peoples livelihood.
What changes have Chinas fiscal and tax systems undergone in the past 70 years? At present, as the foundation and important pillar of the modernization of national governance, what are the characteristics of fiscal and taxation policies? Daily Economic News reporters combed and interviewed this.
The reform of tax system and tax distribution system implemented in 1994 is an important milestone in Chinas financial history.
What is the tax-sharing system? After the reform and opening up, in order to activate the vitality of the local government, the central government has fully authorized the local government to try, and to a greater extent, the financial revenue obtained tends to be reserved for the local government.
This system has enabled the local government to have considerable financial power, and the central governments macro-control ability has been weakened, thus forming a weak central state. In order to change this disadvantage, the central government has carried out the reform of tax distribution system, mainly collecting money and collecting power. Xiang Huaicheng, then Vice Minister of Finance, later recalled that in February 1994, he was anxious to wait for the January tax figures of that year. The final result is a 61% increase over the previous year.
Therefore, the academia judges and affirms the great success of the reform from the realization of one of the goals of that year - increasing the proportion of central fiscal revenue to fiscal revenue.
Nevertheless, the success of the tax-sharing system goes far beyond that. Jia Kang, chief economist of the Institute of New Supply Economics of China, told Daily Economic News in an interview that the landmark significance and historic contribution of the tax-sharing reform in 1994 are far more than that. The significance of the reform of tax distribution system lies in the fact that Chinas financial system has finally been administrative decentralization, moving towards economic decentralization in line with the market economy, and radically transforming the system crux of organizing financial revenue in accordance with the administrative affiliation of enterprises in the past, whether centralization or decentralization.
According to Jia Kang, in terms of the institutional norms of who to pay and what basis to pay, an unprecedented fair competition has been formed for all enterprises, regardless of size, economic nature and administrative level, to be equal and non-discriminatory before the tax law. The state tax should be paid, the local tax should be paid and the local tax should be paid. Competition environment provides a stable expectation for fostering long-term behavior on the basis of stimulating the vitality of micro-enterprises.
Generally speaking, it is widely acknowledged that the reform of tax distribution system in 1994 adjusted the financial relationship between the government and enterprises, and between the central and local governments, emphasizing the two initiatives of the central and local governments, and formed the basic framework of our existing financial system.
Business Reform Increase Leads a New Round of Tax Reform
Since the 18th National Congress of the Communist Party of China, the increase of business operation has led to a new round of tax reform. Starting from the pilot project in Shanghai in 2012 and pushing it all over the country from May 1, 2016, the increase in business operation is considered to be the deepest fiscal and tax reform since the reform of tax distribution system in 1994, and has achieved extraordinary results.
Prior to the pilot operation reform, the coexistence of VAT and business tax led to the complex tax system and the prominent problem of repeated taxation, which restricted the development of service industry and the transformation and upgrading of manufacturing industry. In this context, as the key task of deepening the reform of fiscal and taxation system, the reform and increase of business operations began to pilot, and then pushed forward in an all-round way.
On January 1, 2012, Shanghai took the lead in implementing the pilot project of transformation and expansion of transportation and some modern service industries. Thereafter, pilot areas and pilot industries were expanded successively. On May 1, 2016, the pilot project of business transformation and expansion was launched in an all-round way, and the construction industry, real estate industry, financial industry and life service industry were included in the scope of the pilot project.
Daily Economic News reporter noted that at the end of 2017, the third-party evaluation report of the pilot reform of business transformation and increase issued by the Chinese Academy of Financial Sciences showed that the pilot reform of business transformation and increase unified the tax system of goods and services, optimized the tax structure, reduced the tax burden of enterprises, and enhanced the vitality of enterprises; Changing business model, standardizing and improving management level, expanding enterprise development space, promoting innovation, entrepreneurship and employment.
In an interview with Daily Economic News, Li Xuhong, director of the Institute of Finance and Taxation Policy and Applied Research of Beijing National Accounting College, said that most enterprises believe that the increase of business transformation can eliminate the repeated taxation inside and outside the value-added tax chain, reduce the operating costs of enterprises, standardize the internal management of enterprises, and promote professional division of labor. Some enterprises believe that the increase of business transformation has improved the ability of financial personnel to handle accounts, invoice management, cash flow control, asset liquidation, and enhanced the tax awareness of enterprises.
At present, VAT reform is still in progress. From 2017 to 2019, VAT has been adjusted three times in three years:
In July 2017, the VAT tax rate was divided into four categories and three categories, and the 13% tax rate was abolished.
From May 2018, the 17% tax rate will be reduced to 16%, and the 11% tax rate will be reduced to 10%.
Starting from April 2019, the 16% tax rate for manufacturing and other industries has been drastically reduced to 13%, and the 10% tax rate for transportation, construction and other industries has been further reduced to 9%.
Data released by the General Administration of Taxation show that from April to June this year, 318.5 billion yuan of net tax reduction has been achieved, and 9.4 million VAT taxpayers across the country have achieved tax reduction. Tax and fee reduction further reduces the cost of tax and fee, consolidates the effect of structural reform on the supply side, and directly improves the profitability of enterprises.
A Historical Breakthrough in Personal Tax Reform
On October 1, 2018 and January 1, 2019, China implemented the reform of personal income tax with the theme of tax reduction in two steps, covering the broadest area in history.
For the first time, the reform established a comprehensive and classified personal income tax system, which included four major labor income items, including salary, remuneration for services, contribution and royalties, into the scope of comprehensive income tax. A unified 7-level excess progressive tax rate was implemented and taxed annually, which promoted the horizontal fairness of workers with the same income.
Hu Yijian, Dean of the Institute of Public Policy and Governance, Shanghai University of Finance and Economics, once wrote an article, commenting: This shift from classified taxation to syndrome taxation is undoubtedly of historic significance in the history of individual taxation reform as the most important institutional breakthrough in the reform of individual taxation.
Li Xuhong believes that one of the highlights of individual tax reform is the transformation from classification taxation to the combination of classification and synthesis, which essentially solves the problems of labor taxation and capital gains taxation. Taxation solves the problem of labor taxation by means of comprehensive income, which reduces the tax burden of a large number of middle and low income people.
In the first half of this year, the two-step tax reform factors of personal income tax added and reduced by 307.7 billion yuan, with a total tax reduction of 1340.5 yuan per capita, and a total of 115 million people neednt pay personal income tax on salary income. Influenced by raising the standard of expense deduction, optimizing the structure of tax rate and implementing the two-step reform of special additional deduction, the personal income tax fell by 30.6% compared with the same period last year, which is the largest tax type. At the same time, the red envelope tax reform directly increases the income of residents and improves their consumption capacity.