![Sample our Politics & International Relations journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/5947/TOC-Subject-Sample-2021-Politics-International-Relations.jpg"})
Abstract
The essence of the modern tax system is the unity of the modern tax framework and the functions it supports. Behind the appearance of an unbalanced tax structure lies the reality of the shortcomings and weaknesses of the functions of modern taxation. The heart or soul of the establishment of a modern tax system is making modern tax functions the standard, acting to optimize the tax structure, and creating a form of tax system with a functional balance that integrates “optimized resource allocation, maintenance of market unity, promotion of social equity, and ensuring long-term national stability”—constituting a modern tax framework. The transition from structural imbalance to structural optimization is the fundamental route to establishing a modern tax system. On the premise of maintaining basic stability in the macro-tax burden, the supplementation and strengthening of the shortcomings and weaknesses in modern tax functions primarily involve supplementing and strengthening the direct taxation shortcomings and weaknesses that are in an “absent” or “weak” state in the current tax framework. Increasing direct taxes and raising their proportion essentially mean increasing the tax paid by individuals and raising the share of individual tax revenue in total tax revenue. This is the most important and central aspect of action to optimize the tax structure.
Notes
1 Xi Jinping, “Hold High the Great Banner of Socialism with Chinese Characteristics and Strive in Unity to Build a Modern Socialist Country in All Respects—Report to the 20th National Congress of the Communist Party of China.”
2 Decision of the Central Committee of the Communist Party of China on Several Major Issues concerning Comprehensively Deepening the Reform, p. 19.
3 “CPC Central Committee’s Proposals for Formulating the 13th Five-Year Plan (2016-2020) for National Economic and Social Development.”
4 “Decision of the Central Committee of the Communist Party of China on Several Major Issues concerning How to Uphold and Improve the System of Socialism with Chinese Characteristics and Advance the Modernization of China’s System and Capacity for Governance.”
5 “CPC Central Committee’s Proposals for Formulating the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and Long-Range Objectives Through the Year 2035.”
6 Publicity Department of the Communist Party of China (CPC) Central Committee, The Study Outline of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, p. 32.
7 Gao Peiyong and Wen Laicheng, Concise Dictionary of Taxation, p. 15.
8 Similar summaries include “the functions of resource allocation, income distribution, and economic stability and development” (Chen Gong, Public Finance, pp. 25-30).
9 Decision of the Central Committee of the Communist Party of China on Several Major Issues concerning Comprehensively Deepening the Reform, p. 19.
10 The Ministry of Finance, “Report on the Execution of the Central and Local Budgets for 2021 and on the Draft Central and Local Budgets for 2022,” and “Report on the Execution of the Central and Local Budgets for 2019 and on the Draft Central and Local Budgets for 2020.”
11 This includes customs duty, stamp duty, resource tax, environmental protection tax, vehicle and vessel tax, ship tonnage tax, tobacco tax, deed tax, land value-added tax, cultivated land occupation tax, and urban land use tax, among others.
12 The use of the term “nominally” here acknowledges the possibility of tax shifting. Once the nominal tax burden has undergone a series of transfer processes, its end point is uncertain. Therefore, the one who pays the tax is not necessarily the one who assumes the tax burden.
13 “ … keeping income distribution and the means of accumulating wealth well-regulated” is a new expression introduced in the report to the 20th National Congress of the CPC, emphasizing the need to improve the distribution system.
14 In The Study Outline of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, there is a passage that states: “We must take the promotion of social fairness and justice, enhancing the well-being of the people as a mirror, examining our various systems, mechanisms, and policy provisions. Wherever there are issues that do not conform to social fairness and justice, reforms are needed; wherever there are prominent problems in a specific sector or link, that sector or link is the focus of reform” (see Publicity Department of the Communist Party of China [CPC] Central Committee, The Study Outline of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era).
15 Calculations based on the Ministry of Finance’s “National Financial Revenue and Expenditure for 2021” and “National Financial Revenue and Expenditure for 2019.”
16 Calculation process: (20,253.89 billion yuan + 9,802.37 billion yuan + 517.96 billion yuan + 9,473.47 billion yuan – 2,324.8 billion yuan)/114,367 billion yuan = 17.71 percent.
17 Discussions in the domain of fiscal theory actually have another approach—the ratio of tax revenue to GDP. However, tax revenue is simply a form of fiscal or government income and does not have a fundamental difference in its GDP source or its service as a financial source to offset fiscal or government expenses compared to other forms of fiscal or government income; in reality, various forms of fiscal or government income often grow or decline in tandem, serving as mutually conditional sources. The author consistently believes that in measuring the macro-level tax burden, the percentage of tax revenue to GDP lacks meaningful comparability.
18 See Zhang Bin, Research on Tax System Changes, p. 156.
19 For a systematic analysis of this issue, see Gao Peiyong, “The Continued Growth of Fiscal Revenue Is a General Law of Human Social Development.”
20 Ministry of Finance, “Report on the Execution of the Central and Local Budgets for 2019 and on the Draft Central and Local Budgets for 2020.”
21 The relevant formulation in the Decision of the Central Committee of the Communist Party of China on Several Major Issues concerning Comprehensively Deepening the Reform is “It is necessary to improve legislation, clarify responsibilities, reform the tax system, stabilize the tax burden, ensure transparent budgets, and enhance efficiency,” p. 19.
22 The existing property tax and urban real estate tax, although nominally categorized as property taxes, are not designed to focus on individual residents as taxpayers. These two tax types, with work units in the traditional sense as the basic taxpayer, are not direct taxes.
23 The Outline of the 14th Five-Year Plan (2021-2025) for Economic and Social Development and Long-Range Objectives Through the Year 2035 of the People’s Republic of China, p. 62.