Finance is the foundation and important pillar of national governance. The Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Promoting Chinese-style Modernization has further pointed out the direction for deepening the reform of the fiscal and taxation system.
Yang Zhiyong, director and researcher of the Fiscal and Taxation Research Center of the Chinese Academy of Social Sciences: The contents of the "Decision" on fiscal and taxation reform mainly include three aspects: budget reform, tax reform, and reform of the fiscal relationship between the central and local governments.
In terms of budget reform, in accordance with the "Decision," we will improve the budget system, strengthen the overall planning of financial resources and budgets, and include all revenues obtained by relying on administrative power, government credit, and state-owned resources and assets into government budget management. Strengthen macroeconomic guidance for budget formulation and fiscal policy. Unify the power of budget allocation, improve the uniformity and standardization of budget management, and improve the system of budget disclosure and supervision.
Luo Zhiheng, Executive Director of the China Taxation Society: It is conducive to our budget system taking a big step forward in the direction of comprehensiveness, standardization, openness and transparency, strengthening the overall planning ability of financial resources, and further increasing the government's available resources. Unifying the right to allocate the budget is conducive to giving full play to the economies of scale of finance in supporting major national strategies such as scientific and technological innovation, rural revitalization, and manufacturing development. The budget system integrates all revenues into a unified budget, which is also conducive to promoting the modernization of the modern governance system and governance capacity.
From the perspective of the tax system, the "Decision" makes it clear that it is necessary to improve the tax system conducive to high-quality development, social fairness and market unity, and optimize the tax structure. Study the tax system that is compatible with the new business format. Fully implement the statutory principles of taxation, standardize preferential tax policies, and improve the support mechanism for key areas and key links. Improve the direct tax system, improve the individual income tax system that combines comprehensive and categorical income, etc.
In addition to the budget system and taxation system, the "Decision" also makes arrangements for the reform of the financial relationship between the central and local governments.
According to the "Decision", it is necessary to establish a financial relationship between the central and local governments with clear powers and responsibilities, coordinated financial resources, and regional balance. Increase local independent financial resources, expand local tax sources, promote the backward transfer of consumption tax collection links and steadily decentralize localities, and optimize the sharing ratio of shared taxes. Standardize the management of non-tax revenues, appropriately sink part of the management authority of non-tax revenues, and let the local governments manage them differently in light of actual conditions.
In addition, it is necessary to improve the fiscal transfer payment system, clean up and standardize special transfer payments, increase general transfer payments, and improve the matching degree of financial resources and rights of cities and counties. Establish incentive and restraint mechanisms for transfer payments to promote high-quality development. At the same time, it is necessary to appropriately strengthen the powers of the central government and increase the proportion of central fiscal expenditure.
Luo Zhiheng, Executive Director of the China Taxation Society: The rationalization of the relationship between the central and local governments is conducive to the better implementation of macroeconomic regulation and control by the central government, the better implementation of the decisions and arrangements of the central government by local governments, and the better improvement of the transfer payment system.
According to the data, from 2012 to 2023, the mainland's fiscal revenue increased from 11.7 trillion yuan to 21.7 trillion yuan, and the scale of expenditure increased from 12.6 trillion yuan to 27.5 trillion yuan.
Since the Third Plenary Session of the 18th Central Committee of the Communist Party of China, the reform of the mainland's fiscal and taxation system has continued to make new progress, giving full play to the role of "breakthrough" and "pioneer" in comprehensively deepening reform, and effectively promoting high-quality economic development and social harmony and stability.
After years of reform and practice, the reform of the mainland's fiscal and taxation system has made breakthroughs in many points and advanced in depth, and has achieved remarkable results.
Let's start with tax reform. In 2012, the mainland began to pilot the implementation of "business tax to value-added tax"; In 2016, the pilot project of "replacing business tax with value-added tax" was fully launched, and while the modern value-added tax system was basically established, the tax burden of all industries was "only reduced but not increased", which greatly reduced the tax burden of taxpayers.
The enterprise income tax system has been continuously optimized, supporting the innovation and development of enterprises, and implementing preferential tax policies covering the whole chain of innovation such as venture capital, innovation entities, and R&D activities, especially continuously increasing the policy of additional deduction of R&D expenses, and focusing on cultivating new drivers of economic development.
In 2018, the basic deduction standard of individual income tax was raised to 5,000 yuan per month, and a new tax rate table began to apply. We have introduced a special additional deduction system, initially established a comprehensive and categorical individual income tax system, and benefited thousands of households with dividends from the reform.
At the same time, we will improve the consumption tax system, promote the reform of the resource and environmental tax system, and improve the local tax system...... The tax reform has been steady and efficient, and the precise implementation of tax and fee reductions has promoted the gradual improvement of the modern tax system.
In recent years, the implementation of the mainland's tax and fee reduction policies has been unprecedented, with the proportion of tax revenue in GDP falling from 18.7% in 2012 to 13.8% in 2022, and about 15% after excluding the one-time factor of large-scale tax refunds. In 2023, the total scale of new tax and fee reductions and tax refunds and deferrals will exceed 2.2 trillion yuan, of which more than 70% will be "landed" in the private economy, helping enterprises reduce their burdens and stimulating market vitality.
At the same time, the legal process of taxation in the mainland has been accelerated in an all-round way, and 13 types of taxes, such as environmental protection tax and resource tax, have been enacted to further promote the construction of a scientific and modern tax system.