Outburst! The tax reform is coming, starting with luxury goods

Bureau of Trafficking and Finance

2024-07-02 21:46Creators in the field of finance and economics

There was a big news at 4:30 p.m., and everyone didn't pay much attention to it.

The report pointed out that further improving the local tax system is one of the key directions of reform. Among the four major taxes, consumption tax is the only tax that has not yet been shared by the central government and the local government, so it has been given high hopes in the new round of reform.

Expanding the scope of collection, moving the collection link backward, and steadily decentralizing the local area are the three major points of interest in the future consumption tax reform. Items with mature regulatory conditions, such as high-end watches, precious jewellery and jewellery and jade, may be the first to be piloted.

In the vernacular, the local government has no income from land sales and is crying, so we have to find a way to make other income to make up for it. Then deduct some points from the big cake of consumption tax and give it to the locality. And the tax reform starts with luxury goods.

In other words, the tax on the rich is coming, and the rich have eaten so many dividends of the times, and they should share some responsibility.

The director checked and found that the total income from land sales in the country in 2021 will be 8.7 trillion yuan, and the total income from land sales in 2023 will be 5.7 trillion yuan.

In 2023, the total revenue of the national consumption tax will be 1.6 trillion yuan, and even if it is all given to the local government, there is still a gap of 1.4 trillion yuan, so the top has to find money from other places.

In fact, a few days ago, the individual income tax APP has shown signs of it, and five items have suddenly been added to the "Income Tax Details", which are business income, interest, dividends, bonus income, property lease income, property transfer income and accidental income.

First of all, luxury consumption expenses will take the lead, followed by inheritance tax, real estate tax, departure investment income tax, and so on

Let's look back at the history of fiscal and tax reform.

In the 90s, the tax sharing system was implemented, and the value-added tax, enterprise income tax, personal income tax, and consumption tax were all directly handed over to the central government.

The local government has no tax revenue, and has to work (education, medical care, pension, infrastructure) to spend money, so forced to have no choice but to find a way to "sell land" to make money, so the vigorous 30-year real estate bull market began.

Specifically, you can read "Inside the Matter", a very good book.

Now everyone knows that the "consumption tax" is currently owned by the central government, and the local government does not receive a dime. Local governments can rely on corporate income tax and value-added tax (not to mention the income from land sales).

What is "VAT"?

From raw materials to production to the end of a product, the value-added tax has to be collected several times, regardless of whether the product can be sold in the end, the government has actually received enough taxes and fees, so no one cares whether it can be sold in the end.

As a result, at the government level, they will do everything they can to promote the production of enterprises, and the requirements for the scale of the economy will be very large, until there is overcapacity.

Therefore, our country as a whole is a production value-added tax, rather than a consumption-based value-added tax system.

In the current tax reform, if the value-added tax is changed to consumption tax, which is the main terminal tax, then many behaviors of local governments will change.

For example, local governments will do everything they can to promote the vigorous development of consumer service enterprises, and a large number of jobs will shift from production enterprises to consumer services.

Consumption tax is essentially a "poll tax", so how can no one spend it? It is estimated that a population production campaign will be launched, and the consumption tax will be raised by the whole people to support population production.

The power of fiscal and tax reform is huge, and each round will trigger great changes in the times, and all our behavior patterns will also be involved in the butterfly effect, undergoing unprecedented changes.

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