1 China individual income tax legislation process
In the early days of the People's Republic of China, China did not establish a complete personal income tax system. 1950, the "Principles for the Implementation of National Tax Administration" issued by the State Council stipulated that "income tax on wages and salaries, income tax on deposit interest" should be levied on individuals, but because of the low income level, only interest income tax should be levied. After the reform and opening up, a large number of foreigners came to work in China with high income. Therefore, the China municipal government implemented the individual income tax law on 1980, mainly for foreigners working in China. With the deepening of reform and opening up, great changes have taken place in the income of domestic residents. In order to adjust the social income distribution, the State Council promulgated the Provisional Regulations on Income Tax of Urban and Rural Individual Industrial and Commercial Households and the Provisional Regulations on Personal Income Adjustment on 1986, which are applicable to domestic individual industrial and commercial households and domestic citizens respectively. However, it is controversial to adopt different tax policies for taxpayers with the same income, especially for foreigners and China citizens. In order to standardize the tax system and fair the tax burden, China Municipal Government merged the three taxes and formally implemented the new individual income tax law on 1994.
2 China's current personal income tax implementation status and problems
After the implementation of the new tax law, the national personal income tax revenue 1994 was 7.267 billion yuan, and it has soared to 582 billion yuan in 20 12, which is the fastest growing tax category in the same period. Personal income tax has gradually become the main tax category in China. With China's entry into WTO, the domestic economy has developed rapidly, and the total economic output has jumped to the second place in the world. However, behind the rapid economic development, the average proportion of individual tax in China's total tax revenue is only 6%-7%, which is far behind the developing countries with low economic level. At the same time, the widening gap between the rich and the poor has become increasingly prominent. If the high-speed economic growth of China is linked with the growth of individual tax, we will find that the current individual income tax is out of touch with the social and economic development, and its due function is far from being fully exerted. The reasons are mainly caused by many factors such as weak tax collection and management, lagging tax system construction and so on.
2. 1 The personal income tax collection and management system is not perfect, and tax evasion is serious.
Because personal income tax has the characteristics of hidden income, it must be guaranteed by a strict and perfect collection and management system. However, the current tax collection and management methods in China are relatively backward, which affects the tax collection to some extent.
2. 1. 1 Lack of relevant supporting measures and low level of personal income information management.
Due to the imperfect supporting measures of personal income and the backward technical means of information management in China, the tax department lacks substantive cooperation with many functional departments such as banks, industry and commerce, enterprises and so on. , resulting in the inability to enjoy personal income information and poor information transmission. The tax authorities can not fully grasp the taxpayer's production and operation, capital flow and changes in property, and can not accurately judge tax sources and organize tax collection and management. The phenomenon of tax loss is very serious.
2. 1.2 weak collection and management, lack of effective supervision of high-income groups.
For a long time, China's individual tax is mainly withheld at the source, supplemented by self-declaration, and the scope of self-declaration is limited to five types of situations with annual income of 6.5438+0.2 million yuan, and self-declaration lacks a rigid binding mechanism. This collection and management system only covers the working class, but it can do nothing for high-income groups. There is a simple reason. Due to the strict withholding of wages and salaries, the tax has "nowhere to escape". For high-income groups with diverse and hidden incomes, we can "reasonably avoid taxes" through various means such as pre-tax planning. Without taking the initiative to declare, the tax authorities can't find out the source of their income and effectively monitor it, resulting in a large number of taxes receivable that can't be collected in full. In the United States, personal income tax is mainly levied on the high-paid class, and the individual tax paid by the working class only accounts for 10% of the federal personal income tax. In contrast, the high-income groups in China, which should be the main force of tax payment, failed to bear their due share of tax revenue, and tax evasion was widespread.
2.2 The current tax system is unscientific and unreasonable.
2.2. 1 Classification tax system is difficult to reflect fairness.
China's current individual income tax law basically retains the basic framework and main contents of the 1994 tax law. This classified tax system implements different tax standards for different incomes, which is not conducive to the function of adjusting the income gap.
The income is the same, but the tax burden is different.
For example, A and B have different jobs and earn the same monthly income.
6,000 yuan as salary income, and Party A should pay a monthly tax of 145 yuan; As labor remuneration, Party B earns 6,000 yuan, and shall pay a monthly tax of 960 yuan. Both of them have the same income, both of which are labor income, and should pay the same tax. However, due to different sources of income, different applicable tax rates and different expenses, the taxable amount is different.
Those who earn more do not pay taxes, and those who earn less pay taxes.
C The monthly salary is 5,500 yuan, and 95 yuan is taxable every month; Ding Yue's income is 6,700 yuan, including salary of 3,500 yuan, labor remuneration of 800 yuan, remuneration of 800 yuan, property lease income of 800 yuan and royalties of 800 yuan. Ding's income is obviously higher than that of C, so he should pay more taxes, but Dante doesn't have to pay taxes because his salary is within the tax-free range. The other four taxable incomes of 800 yuan after deducting expenses are "0", so he doesn't have to pay taxes. Ding, who has a high income and is diversified, does not have to pay taxes after many deductions, and C, who has a low income and focuses on one tax item, has to pay taxes. This phenomenon of "the poor pay taxes and the rich avoid taxes" is extremely unfair.
(3) It is unscientific to calculate income by month or time, and the tax burden of income obtained by time is quite different from that obtained by one time.
Taxpayers whose income is concentrated at a certain time will be taxed on a monthly or time basis, and all kinds of income will no longer be summarized at the end of the year, which will inevitably lead to excessive taxation. For example, Xiao Yang and Zheng Xiao are both employees of a company, and Zheng Xiao works in the finance department with a monthly salary of 3,500 yuan, so there is no need to pay taxes according to the current tax law. Xiao Yang works in the sales department with a monthly salary of 2000 yuan. In addition to the monthly salary in February, he also won a one-time bonus of 15000 yuan for the whole year for his outstanding sales performance. Xiao Yang's annual income is not more than Zheng Xiao's, but according to the current tax law, Xiao Yang has to pay a tax of 405 yuan for the bonus he receives at one time. It is unfair to bear different tax burdens just because the income is realized at different times. 2.2.2 The tax rate structure is complicated and unreasonable.
There are two forms of personal income tax rate in China: progressive tax rate and proportional tax rate. That is, the income from wages and salaries is subject to a seven-level progressive tax rate of 3% ~ 45%; The five-level import tax rate of 5% ~ 35% is applicable to self-employed households and contracted tenants; The applicable tax rate of labor remuneration is 20%, but if the one-time income is abnormally high, it will be levied additionally, and the corresponding progressive tax rates are 20%, 30% and 40%; The actual tax rate of remuneration is14%; Other income tax rates are all 20%. This tax rate structure has the following problems:
There are two sets of progressive tax rates for the same labor income, and there are provisions for additional levy, which leads to too many forms of progressive tax rates and complicated calculation. Because the boundaries between income from wages and salaries and income from labor remuneration are vague in real life, it takes a lot of energy and time to define them, which increases the collection cost and reduces the collection efficiency. Moreover, taxpayers can also achieve the purpose of tax avoidance by changing their identity and changing the nature of income according to the tax rate.
(2) There are too many progressive tax rates. For example, the progressive tax rate of wages and salaries is as high as seven grades, which can reach the last few grades according to the current wage level, resulting in some tax rates in name only.
(3) For labor income such as wages and salaries, the high tax rate is applicable, with the highest tax rate reaching 45%, while for accidental income such as winning prizes and lottery tickets, the applicable tax rate is 20%, with the highest difference of 25%. Such tax rate setting violates the policy orientation of getting rich through hard work, reduces work enthusiasm and encourages individual speculation.
2.2.3 The formulation of expense deduction is unscientific.
The pre-tax deduction system of personal income tax in China is relatively simple. Among them, the deduction of wage and salary income tax does not fully consider other factors that affect the taxpayer's ability to pay taxes, such as the number of family dependents, employment or not, and only stipulates the exemption amount (3500 yuan per month) which is unscientific. At the same time, the formulation of the exemption amount lacks an indexation mechanism that can be adjusted automatically on a regular basis. Every adjustment must be approved by the National People's Congress Standing Committee (NPCSC) before implementation, and the procedures are cumbersome and the adjustment is lagging behind.
2.2.4 The setting of preferential relief is not standardized.
With the constant changes in the economic environment, some tax relief projects formulated in the early 1980s no longer meet the current requirements, such as suspending the taxation of stock transfer income. With the continuous expansion of China's capital market, stock trading and foreign exchange trading are becoming more and more popular. Most of them are high-income people with good economic foundation, and the transaction amount ranges from several thousand yuan to tens of thousands of yuan. Many high-income people get rich through the stock market. Like these incomes, you can also enjoy tax reduction and exemption without taxation. But for ordinary wage earners, no matter how heavy the family burden is, the part that exceeds the exemption amount is taxed according to the regulations. This is simply "picking up sesame seeds and losing watermelon." In addition, foreigners enjoy more preferential policies of pre-tax deduction than domestic residents. This "super-national treatment" violates the principle of fair tax burden for Chinese and foreign taxpayers.
3 China's personal income tax measures to improve
3. 1 Further improve external supporting measures and form a tax prevention and control system.
Tax collection and management is a systematic project, which can not be confined to the tax department, but needs the cooperation and support of all functional departments of society. It is suggested that government departments further improve supporting laws and regulations to create a good legal environment for personal income tax collection and management.
3. 1. 1 Accelerate the national personal income tax collection and management information networking.
The urgent task is to use modern information technology to establish a computer networking system between the tax department and several functional departments, and to build a cross-examination system of personal income information, so that the tax department can grasp the taxpayer's income information more completely and accurately, which is convenient for supervision and inspection and plug loopholes.
3. 1.2 Strengthen the personal income monitoring mechanism
Draw lessons from foreign experience, establish a personal lifelong tax number system, and individuals are registered under this tax number when opening an account in a bank, earning income or spending. At the same time, strengthen the bank's management of personal payment settlement, limit the scope of cash use, develop credit card business, and all payments exceeding the settlement starting point will be settled by bank card transfer, so that the inflow and outflow of large amounts of income and expenditure can be traced back and tax evasion can be prevented from happening at the source. At the same time, improve the personal property registration system to make taxpayers' property income transparent.
3.2 Establish a scientific and effective tax collection and management system
3.2. 1 Improve the collection and management methods and implement the two-way declaration system.
Withholding and paying taxes is an effective way to collect taxes from the source. We should continue to strengthen and improve this system and resolutely stop withholding agents from assisting taxpayers in tax evasion. At the same time, expand the scope of self-declaration, implement a two-way declaration system, summarize the declaration information of withholding agents and taxpayers, establish electronic files, and then introduce third-party information for comparison and verification to improve the authenticity and accuracy of self-declaration data.
3.2.2 Intensify publicity and improve the reward and punishment mechanism of tax collection and management.
Establish a corresponding tax payment integrity system, link the taxpayer's tax payment integrity with some priorities of personal social welfare and other social activities, and form incentive measures for taxpayers. At the same time, draw lessons from the more mature tax inspection system in foreign countries, conduct special inspections on the personal income tax of high-income people, and the tax authorities will randomly check a certain proportion of taxpayers. If tax evasion is found, heavy punishment will be given. Only by organically unifying the rights and obligations of taxpayers can we continuously strengthen taxpayers' self-discipline awareness.
3.3 Amend and improve the individual income tax law
3.3. 1 standardize the scope of taxation and expand the tax base.
China's personal income tax only levies on the tax items 1 1 listed in the tax law, and does not levy taxes on those that are not listed. Obviously, this "positive list" can't bring emerging new tax sources into the scope of collection in time, and can't adapt to the development trend of income diversification. With the continuous development of economy, the capital income and hidden income of China residents have increased, and there are many additional benefits, such as the consumption of public funds and the private use of buses. With the rapid development of network economy, network transaction and network virtual currency operators have also gained considerable income. However, the current tax law does not fully include these tax sources, and excludes option transfer, equity transfer, gray income and illegal income under the new situation, resulting in a narrow tax base. China should follow the American "counterexample" law. In addition to the tax exemption items stipulated in the tax law, other incomes that can increase the income of personal assets should be included in the scope of taxation. Only in this way can the tax base be expanded.
3.3.2 Implement a classified and comprehensive collection system.
All labor income in individual income tax should be comprehensively collected and assessed annually. Income shall be paid in advance on a monthly basis or in installments, and shall be settled at the end of the year. Income whose annual comprehensive income exceeds a certain standard shall be levied at a uniform tax rate, and the tax withheld and remitted may be deducted. After settlement, refund more and make up less. Other non-labor income continues to be classified according to the proportional tax rate, and the tax levied on classified items is the final tax, which is no longer included in the scope of comprehensive collection.
3.3.3 Implement a single proportional tax rate.
The tax rate is the core element in the tax system, and its level directly affects the burden of taxpayers. In order to adapt to the principle of "low tax rate and wide tax base" in the world tax reform, China's tax reform should abandon the progressive tax rate and choose a single proportional tax rate with exemption. On the basis of broadening the tax base, adopting a lower single tax rate can reflect the progressiveness of tax revenue from another aspect, and Russia is a good example. In 200 1 year, after Russia's individual tax rate changed from progressive tax rate to single tax rate 13%, the tax revenue increased instead of falling, and the individual tax revenue tripled. China SAR is also a single tax system, and the richest 8% group bears half of the personal income tax, which shows that the single proportional tax rate can also reflect the principle of affordability.
3.3.4 Formulate scientific and reasonable expense deduction.
Expense deduction can be combined with exemption amount and specific expense deduction. Exemption is a necessary expense to maintain basic living; The deduction of specific expenses can be determined according to the taxpayer's family structure, employment situation and health status. As our country is in the period of economic transition, the education expenses, support expenses and medical expenses with heavy burden on the people can be used as specific deduction items. At the same time, the expense deduction must be indexed.
Personal income tax reform is an important part of China's new round of tax reform after 2003. Its reform is a process of dynamically seeking the optimal system. We should take a step-by-step approach, starting with the transformation from classified tax system to classified comprehensive tax system, gradually improve the tax management system, strengthen the taxation of high-income groups, and step by step, so as to make China's tax system develop more reasonably and healthily.