Twelve-five major tax cuts: the tax reform will be launched at the earliest next year
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Our reporter was informed that the personal income tax reform will be launched at the earliest opportunity in the next year. A person involved in the design of the program said that the tax reform did not raise the threshold as a breakthrough, but chose a scheme equivalent to lowering the tax rate, and the tax reduction was more obvious.
According to people familiar with the matter, this is only part of the tax package for the 12th Five-Year Plan. In terms of reducing corporate tax burden, the abolition of business tax and the reduction of VAT rate will also become a reality in the next five years. In a planning document drafted by the State Administration of Taxation, tax cuts run through the redesign and reform of the entire tax system.
China will therefore welcome the largest tax reform since the 1994 tax reform. At present, the plans formulated by relevant parties have not yet covered specific tax rates and rules. It is difficult to estimate how much tax reductions can be made after the introduction of these tax reform schemes. However, a local tax official said that the tax reduction rate of the “Twelfth Five-Year Plan†seems to be higher than that. The scale during the financial crisis was much larger. Since the outbreak of the financial crisis in 2008, the Chinese government has adopted a series of tax reduction measures that are expected to reduce taxes by 500 billion yuan.
Reduce the tax burden of low- and middle-income people
A local tax official said that the central government began several investigations in the "Twelfth Five-Year Plan" last year.
Regardless of whether it is about the national income distribution or the tax reform, they have emphasized two points to the research team: one is to reduce the personal income tax for low- and middle-income people; the other is to eliminate the double taxation and the tax system that affects industrial development. “Local recommendations may differ in details, but as far as I know, they are basically two.â€
According to our reporter, there are two options for the reform of personal income tax in the near and medium term. The Ministry of Finance and the State Administration of Taxation have always wanted to introduce a comprehensive tax system as soon as possible, and do not think that the threshold can regulate income distribution. However, due to various factors such as law, information collection, and coordination of ministries and commissions, the comprehensive tax system cannot be implemented in the short term. In view of the urgent need to reduce tax burdens for low- and middle-income earners, the Ministry of Finance and the State Administration of Taxation have developed a recent personal income tax plan.
This program will be launched at the appropriate time in 2011. The program’s threshold for the people’s expectations is not clear, and the level and level are unexpectedly thought out. The tax reduction will be more obvious than the call-up point because it actually equals the tax rate.
At present, China's personal income tax is a progressive tax rate of 9, which is quite complicated in the world. What to do next year is to “reduce the level and adjust the levelâ€.
"The international average tax rate of 4 to 5, China has long been adjusted," said a local tax cadre. It is reported that this tax reform plan will reduce the level 9 tax rate to 6 to 7 levels, while appropriately expanding the level.
At present, the first level of 500 yuan, that is, the income after deducting the levy of 2,000 yuan from the wage income, corresponds to the 5% tax rate; the second level is 2,000 yuan, 10% of the tax rate; and so on to 5,000 yuan, 20,000 yuan, the tax rate respectively It is 15% and 20%.
After the reform, the first level is expected to be adjusted to 2,000 yuan, corresponding to a 5% tax rate. “The next step can be up to 20,000 yuan. This range is subject to a 10% tax rate, so the tax rate is equivalent to a drop of half. Most low- and middle-income people are concentrated at the lowest level or two-level tax rate.†A local tax Officials suggested.
In addition, according to the plan, the starting point of labor income and property transfer income should be adjusted to the same level as wages and salaries. At present, the starting point of these two incomes is still 800 yuan. "This part of the income is generally from mental workers, which can also reduce the burden of middle-income people." Scholars analyzed.
"The adjustment of the distance and grade is what we did not expect, because the short-term method is everyone's focus on the threshold, but the up-regulation effect is not obvious, but will further reduce the tax population. According to the estimation of the distance, the working-class in the country may have to cut taxes by several hundred million yuan,†said the local taxation department official.
At the same time as the implementation of the near-term target, the Ministry of Finance and the State Administration of Taxation are also intensifying their research and development of medium- and long-term goals, namely, the integration of individual income tax with classification. “The future fiscal and taxation department will determine a support factor and determine the final tax amount based on the design factor of the family support population,†said a person familiar with the matter.
“This medium- and long-term goal is very difficult to achieve because it requires taxpayers to declare their own taxes. It also requires the tax authorities to have a variety of information, including family marital status, bank accounts, etc. It is not optimistic whether the 12th Five-Year Plan can be achieved.†People said.
High-income tax reform plan is not fixed
The central government also asked the tax authorities to formulate tax adjustment measures for high-income earners and raise their tax burdens, but this task has not yet made progress. Some sources said that the opinions on the tax relief for the working class are basically the same, there is not much disagreement, but the adjustment of the high-income people is very different, and the discussion has not formed a unified opinion many times.
The adjustment of high-income taxes is mainly raised, but at present, the highest 45% tax rate in China is already high in the world. If it is raised, it can only cause the rich to maliciously evade taxes.
A local tax official suggested that the reverse operation, reduce the highest marginal tax rate, such as to 30%, let the rich accept and will be willing to pay taxes, so that the tax will only be collected more than in the past.
At present, many wealthy people in China have transferred their income to Hong Kong, Singapore and other regions and countries to evade China's high taxes. Shanghai began to try first last year, limiting the maximum amount of financial executives' taxes to 25% to attract these people to pay taxes in China.
The adjustment of high-income people is uncertain in two opposite policy recommendations, and no plan has yet been formed.
Corporate tax reduction
For companies, the biggest tax category – the VAT discount will be more attractive. During the “Twelfth Five-Year Plan†period, the value-added tax shall completely replace the business tax and become a tax covering industrial, commercial and service industries, and the business tax shall be cancelled at the same time. "This reform is imperative during the 12th Five-Year Plan," said a tax official.
Business tax is based on the full amount of turnover, not taxation based on price difference, and it is not as tax-only as value-added tax. Take the service industry as an example, the value-added tax paid by the purchased goods consumed by the service cannot be deducted. Therefore, the service industry bears the double tax burden of business tax and value-added tax.
Financial and insurance companies have written to the central authorities for several years, hoping to reduce the business tax rate of financial and insurance companies. In a recent report, they demanded that the tax rate fall below 3%.
In 2009, China implemented the VAT reform, and the original production type was converted to consumption-type value-added tax. The value-added tax included in the machinery and equipment purchased by the enterprise was deducted from the sales. In the year of 2009, the tax cuts amounted to 170 billion yuan.
Business tax covers the service industry, real estate and intangible assets. After the VAT covers the business tax, the real estate such as factory buildings and workshops invested by the enterprise will be deductible from the sales. The tax reduction of this measure may be higher than the deduction of machinery and equipment, which is a very practical concession for the enterprise.
In addition, since the business tax is included in the value-added tax, the value-added tax has achieved the deduction of the entire industrial chain, eliminating the double taxation, and its tax reduction effect will be very large. "We can't measure this, but the entire service industry will benefit from it, such as finance, trust, insurance, logistics, transportation, etc." said Yang Zhiyong, director of the Finance Research Office of the Chinese Academy of Social Sciences.
According to this newspaper, after the VAT covers the business tax, the VAT rate may also decrease, which will be a general benefit rather than a selective discount. Once a few points are adjusted, the tax cuts are very large.
In addition to the "two high and one capital" enterprises, most of the restricted enterprises will be covered by these preferential treatments. A garment enterprise owner in Jiangsu said, “If VAT is implemented according to this plan, my company will not only deduct the factory building, but also the R&D expenditure can be deducted, which can save a lot of tax expenditure.â€
The consumption tax is also brewing out some of the goods out of the consumption tax, that is, the cosmetics are removed from the consumption tax, and the gold jewelry is also transferred out of the consumption tax in the long run. "As people's living standards improve, cosmetics are no longer a luxury. Now this tax system has promoted cosmetics sales in Japan, France and other countries," said a tax official. The same is true for gold jewelry.
Tax reduction pressure and motivation
"Our current tax is really high, it can't be reduced." The two tax officials from Jiangsu and Gansu provinces sent the same sigh.
Even tax officials have reported that it is embarrassing to say that they are from the tax department when they go out to communicate. "As soon as you say your identity, someone will complain to you about the high taxes and taxes."
"Now there are too few pre-tax deductions, travel subsidies, car subsidies are subject to a tax, and family expenditures are not considered, the tax rate is relatively high," said a local taxation department official. A person who pays more than 2,000 yuan a month has to pay taxes, but this income is a problem in many cities. A white-collar with a relatively good income has a monthly income of more than 7,000 yuan. He may have to repay the loan with 2,000 yuan, leaving 5,000 yuan, and pay a tax of 625 yuan. The remaining 4,375 yuan still has to pay for education, medical treatment, and human relations. “This income is almost impossible to deposit in a big city now,†said Ms. Huang, who works in a media.
The State Administration of Taxation has released that in the personal income tax, the proportion of wage earners is two-thirds. The reduction of the tax burden of the working-class and low-income earners has become the strongest voice of the community.
The taxation of enterprises is not easy. With the improvement of the level of collection and management, the drawbacks of the unreasonable tax system have begun to become prominent, which has seriously affected industrial development and enterprise innovation.
For example, the repeated taxation of the current business tax has seriously impeded the division of labor in the service industry; the VAT rate is high, the real estate is not deductible, and there are similar types of taxes.
The boss of the above-mentioned Jiangsu clothing enterprise said that now the company pays various taxes and fees and pays social security for employees. The remaining profits are very small. It is often better to sell the company to eat interest at home.
A local taxation official said, “Some tax cuts can alleviate the burden on enterprises while activating the enthusiasm of corporate investment innovation. Tax cuts are not only driven by pressure but also motivation.â€
However, Sun Gang, a researcher at the Research Institute of the Ministry of Finance, said, "The design of the program does not mean that it can be introduced. We have done a lot of good planning in the past five years, but in the end we have not been able to introduce it, so we must look at the plan rationally because of the macroeconomic situation. And some subjective and objective reasons may cause a good program of miscarriage."
Almost all the scholars interviewed believe that tax cuts do not mean that China's tax revenue will decrease, they are convinced that China's tax revenue will continue to increase, which is related to economic development and related to structural adjustment, because tax cuts At the same time, the two high and one capital will greatly increase taxes, the collection of high-income people will also strengthen, property tax levy, environmental tax levy, resource tax increase and so on.
Source: Economic Observer Finally, Yang Zhiyong emphasized that the real estate tax design that is being developed must be moderate, otherwise the benefits from the previous taxes will be digested.
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