On June 19, the "Amendment to the Personal Income Tax Law of the People's Republic of China (Draft)" was submitted to the third meeting of the Standing Committee of the 13th National People's Congress for review, indicating that my country's personal income tax law will Ushering in the seventh revision since its introduction in 1980. As a tax levied directly on individuals, every move in personal income tax reform has attracted widespread social attention. So, what new actions will this reform bring? What impact will it have on personal tax burdens and social income gaps? This reporter sorted this out.
The first thing that arouses social concern in this personal income tax reform is the adjustment of the threshold. The "Draft" proposes to increase the basic deduction standard for personal income tax comprehensive income, commonly known as the threshold, to 5,000 yuan/month (60,000 yuan/year).
As soon as the news came out, many people began to calculate their future income. Some people were happy that they would no longer have to pay taxes. Others felt that this threshold was too low compared to their living expenses. , seems not enough to quench your thirst. "My husband and I now earn more than 10,000 yuan a month, but after deducting the mortgage, daily consumption, and the money for the children's kindergarten, we are almost a 'money earner.'" Liu Xin, who works in the media in Shanghai, said about the starting point I’m not sure how much tax reduction will be achieved after the increase.
It is reported that since the individual tax threshold was set at 800 yuan/month in 1980, my country has adjusted the individual tax threshold three times based on economic and social development, and raised it to 1,600 yuan/month in 2006. monthly, in 2008 it was raised to 2,000 yuan/month, and in 2011 it was raised to the current level of 3,500 yuan/month.
This time it is planned to raise the threshold for personal income tax to 5,000 yuan/month (60,000 yuan/year). From the perspective of the adjustment range, it is equivalent to the last time. According to survey data recently released by the National Bureau of Statistics, the average annual salary of employees in enterprises above designated size in my country was 61,578 yuan in 2017. From the perspective of social income levels, the individual tax threshold is basically consistent with the current income level of ordinary employees.
“According to this standard and combined with the adjustment of the tax rate structure, the overall tax burden of taxpayers who obtain comprehensive income such as wages and salaries has dropped to varying degrees. In particular, the tax burden of the middle- and lower-income groups has dropped significantly. It is conducive to increasing residents’ income and enhancing consumption power.” Finance Minister Liu Kun said in an explanation of the “Draft” that the “Draft” will increase the basic deduction standard for comprehensive income to 5,000 yuan/month (60,000 yuan/year). It comprehensively takes into account various factors such as the growth in people's consumption expenditure, and reflects a certain forward-looking attitude.
In fact, raising the tax threshold is only a "visible" burden reduction, and more burden reductions are reflected in "invisible" reform measures.
“This personal income tax reform is a triple tax reduction linkage, that is, raising the threshold + expanding the scope of low-end tax rates + special additional deductions, which will generally reduce the burden on taxpayers.” Member of the Standing Committee of the National Committee of the Chinese People’s Political Consultative Conference, senior registration Accountant Zhang Lianqi said that compared with the increase in the threshold, what is more noteworthy is that the personal tax reform will expand the gap between middle and low tax rates, which is crucial to enhancing the sense of gain for middle-income and lower-income groups. In addition, the increase in special deductions for education, medical care and housing will also greatly reduce the tax burden on ordinary people.
The "Draft" proposes that based on the current wage and salary income tax rate, it is planned to adjust the monthly calculation of taxable income to annual calculation, and optimize and adjust some tax rate brackets: expand 3%, 10 The gap between the three low tax brackets of % and 20% will be correspondingly narrowed for the 25% tax bracket, while the gap between the three higher tax brackets of 30%, 35% and 45% will remain unchanged.
“This reform is a comprehensive reform and is more powerful than before.” Li Xuhong, director of the Institute of Fiscal and Taxation Policy and Application of the Beijing National Accounting Institute, said that unlike previous reforms that simply raised the threshold, this time individual The tax reform uses measures such as tax rate adjustment, special deductions, and comprehensive collections. While improving the personal income tax system, it also better takes care of social equity and will effectively play the role of personal tax in adjusting social income gaps.
Li Xuhong calculated an account for reporters based on the currently known reform plan: Assume that an ordinary employee’s various social insurance premiums are 2,000 yuan, and without considering special deductions, the monthly income is 1 At 10,000 yuan, its current monthly tax payable is 345 yuan. After the reform, the average maximum monthly tax payable is 90 yuan, and the tax amount is reduced by 255 yuan, a decrease of approximately 74%. When the monthly income reaches 15,000 yuan, the current monthly tax payable is 1,370 yuan. After the reform, the average maximum monthly tax payable is 590 yuan, and the tax amount is reduced by 780 yuan, a decrease of approximately 57%.
If special deductions for education, medical care and housing are added, the personal tax burden of ordinary residents will be further reduced after the reform. "These special deductions are actual expenses incurred by most families. If these deductions are added, the actual tax amount for groups with a monthly income of about 10,000 yuan will be even lower." Li Xuhong said.
Balance individual differences and special deductions to make the tax burden fairer
During the implementation, certain restrictions will be added to the deduction of mortgage interest, etc., which will not give real estate speculators an opportunity< /p>
In a general sense, the personal income tax system has three functions, namely, raising fiscal revenue, regulating income distribution, and stabilizing the economy.
In recent years, society’s expectations for the function of personal taxation in regulating income distribution have become higher and higher. How can personal taxation be made more considerate of individual differences? This reform provides a "prescription" - increasing special additional deductions.
The "Draft" proposes to increase special additional deductions that are closely related to people's lives, such as children's education expenses, continuing education expenses, serious illness medical expenses, housing loan interest and housing rent. "Special additional deductions take into account the differences in personal burdens, are more in line with the basic principles of personal income tax, and are conducive to a fair tax system." Liu Kun said.
“The current personal income tax is collected by classification and withholding, without taking into account the integrity of comprehensive income and the differences in taxpayer burdens.” Zhang Lianqi said, giving full play to the function of personal income tax to adjust income gaps. , improving the pre-tax deduction mechanism and reflecting the fairness and rationality of individual tax should become the focus of reform.
“Both special deductions and standard deductions are conducive to reducing the tax burden. According to international experience, some countries only allow one of the two to be deducted, and some countries can only choose the higher amount for deduction. , and our country allows both deductions this time, which fully reflects the focus of tax reform on people’s livelihood,” Li Xuhong said.
Li Wendong, who lives in Haidian District, Beijing, has been working for more than two years. Rental expenses have become one of his largest living costs in Beijing. The news that housing expenses are deducted from personal income tax makes him both excited and confused: "Listen, It is said that mortgage interest must be deducted from personal income tax. Will this encourage everyone to take out loans to buy houses? Will house prices rise sharply again? "
"There is a misunderstanding in the society that mortgage interest is deductible from personal income tax. The tax means that all interest payments will be deducted, which is actually not in line with the direction of personal tax reform. "Li Xuhong said that when the personal tax reform is implemented, certain restrictions will be added to the deduction of mortgage interest, etc. to distinguish investment properties. With residential real estate, there will be no opportunity for real estate speculators to take advantage of.
“Special deductions do not mean unlimited deductions. Corresponding standards must be formulated based on the level of economic and social development.” Bai Jingming, deputy director of the Academy of Fiscal Sciences of the Ministry of Finance, told reporters that the special deductions for personal income taxes are Designed to reduce income gaps, it will not aggravate unfair income distribution and cause problems such as rising housing prices.
The tax system is more perfect, and personal tax has taken the first step towards comprehensive collection
While improving the tax system, comprehensive collection also puts forward higher requirements for tax collection and management
In addition to new measures such as the threshold and special deductions that ordinary people are concerned about, from the perspective of tax reform, a highlight of this personal tax reform is the establishment of a comprehensive and classified personal income tax system.
Currently, my country's personal income tax implements a classified tax system, which levies separate taxes on 11 items of income including wages, salaries, labor remuneration, and property transfer. The tax rate and collection method of each income are quite different. The "Draft" proposes that four types of labor income, including wages and salaries, income from labor remuneration, income from author's fees, and income from royalties, will be included in the scope of comprehensive tax, and a unified excess progressive tax rate will be applied. Classified taxation is still adopted for business income, interest, dividends, dividend income, income from property leasing, income from property transfer, incidental income and other income.
“The biggest advantage of the classified tax system is that the cost of collection and administration is low, and the disadvantage is that it is less fair.” Zhang Bin, a researcher at the Institute of Finance and Economics of the Chinese Academy of Social Sciences, said that one of the characteristics of the classified tax system is that it “does not recognize money. "Recognizing people", especially high-income earners with diversified incomes, only taxes each specific income, making it impossible to measure how high their overall income is and making it difficult to better adjust the income gap between different groups.
“Taxpayers paying taxes independently according to different categories will cause tax distortion between different income items, which is very unreasonable.” Li Xuhong gave an example. Under the classified tax system, labor remuneration and Wages and salaries are both labor income, but the applicable tax rates are different. The applicable tax rate for labor remuneration below 8,000 yuan is much higher than the same amount of wages and salaries. Some people pay too much tax, while others don't pay enough. This is obviously unfair.
“Synthetic collection is undoubtedly a key word of this reform. Collecting wages and salaries and other labor income of similar nature together will help to better measure the income gap of individuals and give full play to the personal income tax. "It plays an important role in regulating income," Bai Jingming said. While improving the tax system, syndrome tax also puts forward higher requirements for tax collection and management. In the future, personal tax may gradually move from relying on unit withholding to personal tax declaration. Moving from monthly collection to annual collection requires the joint efforts of finance and taxation departments, banks and other departments, and the use of technical means such as the Internet to better grasp personal income information and ensure efficient collection of individual taxes.
This "Draft" specifically adds anti-tax avoidance provisions, giving tax protection against tax avoidance behaviors such as individuals not transferring property according to the arm's length principle, avoiding taxes in overseas tax havens, and implementing unreasonable business arrangements to obtain improper tax benefits. The authority has the authority to make tax adjustments according to reasonable methods.
“Realizing all tax receivables is the basis and prerequisite for tax fairness, and is also the guarantee for the full effect of individual tax reform.” Li Xuhong said that in response to the comprehensive collection of individual income taxes, my country’s finance and taxation departments have in recent years A lot of preparations have been made, and in the future we should strengthen the coordination and cooperation of all parties in society to effectively plug tax loopholes and lay a solid foundation for the smooth advancement of individual tax reform.