Chinese and Western cultural differences and tax reform

Abstract: Our country’s real culture is characterized by face and human relationships. In this culture, it is difficult for law enforcement not to be influenced by human relationships, thus forming The social psychology of "breaking the law is just to be punished" with low expected costs. Systems that are effective in Western culture cannot have the same effect in our country's cultural environment. The direction of improving the tax system is not the so-called international integration, but should follow the principle of national conditions. The principle of national conditions not only requires that our country is still in the primary stage of socialism as the basic starting point, but also requires paying attention to China's actual culture and seeking to be effective in my country's actual culture. The operating system and its management methods. It is to design a system that makes face, favors and guanxi ineffective, that is, a system that opposes face, favors and guanxi, so that the system can be truly implemented and the ideals of efficiency and fairness embodied in the system can be realized.

Keywords: Tax reform, value-added tax, personal income tax, Western culture, Chinese culture, comparative culture

There is a common view that the process of implementing WTO rules is the integration of systems and management mechanisms with international practices. process. To be in line with international standards is to be in line with the West. The economic system and taxation system must adopt Western models. It seems that only China can do things that have been done abroad, especially in developed countries (even if a careful analysis is made of a certain system in Western developed countries, there are already many problems) , China cannot do anything that Western countries have not done. Practice has proved that this kind of reform decision-making thinking and the wholesale copying of Western theories and systems not only cannot solve China's actual problems, but also have endless consequences. China's economic reform, including tax reform, can only succeed if it is based on China's specific national conditions and takes the principle of national conditions as the first principle. The principle of national conditions not only requires that our country is still in the primary stage of socialism as the basic starting point, but also pays attention to the differences between China's actual culture and Western culture.

1. Western tax system model and the cultural basis for its effective operation

(1) Western tax system model

Western culture has an impact on the political and economic systems and taxation of Western countries Institutions have wide-ranging effects. Here the author only wants to analyze two systems that have an important impact on the construction of our country's tax system, namely the value-added tax system for deducting input tax based on invoices and the self-declared personal income tax collection and management system, explaining that they can only be effective in a Western cultural environment.

1. The system of deducting value-added tax from input tax based on invoices. The main purpose of adopting value-added tax is to overcome the shortcomings of traditional circulation tax collection and double taxation. Allowing deductions for VAT paid on inputs purchased by taxpayers (i.e., input tax deductions) is the most basic feature of VAT, and it is also the basic mechanism for VAT to overcome the shortcomings of the traditional full-value turnover tax. How well the input tax credit system operates is the most critical factor that determines the success or failure of the VAT reform. Input tax deductions can be based on accounting records (account book method), or based on data recorded in invoices for purchased goods, that is, invoice method. The characteristic of the invoice method is that VAT invoices with special provisions are used as the only evidence to deduct input tax. When the system of deducting input tax based on invoices is fully implemented in accordance with the law, all taxpayers in the value-added tax system receive equal treatment. They all have the right to obtain input tax deductions based on legal VAT invoices, and also have the right to transfer all VAT accumulated to this stage to the purchaser of goods or services in the next stage by issuing VAT invoices, and ultimately transfer The amount of the tax is transferred to the consumer of the goods or services. Taxpayers other than final consumers, that is, all producers and operators who are not taxpayers of final consumer goods or services, regardless of the form of their production and operation, whether they are vertically integrated omnipotent enterprises or horizontally integrated specialized division of labor cooperative enterprises, are subject to They are in the same taxpayer position - they are all collectors and remitters of VAT, and only the final consumer is the bearer of VAT. The value-added tax burden on goods or services has nothing to do with the number of production and operation links they pass through. This solves the shortcomings of traditional full-value turnover tax collection and double taxation. In addition, the mechanism of deducting input tax based on invoices also establishes an automatic cross-audit mechanism among taxpayers, thereby inhibiting tax evasion. If the accounting method is implemented, it will be impossible to establish an interlocking chain of VAT.

⑴ However, most taxpayers still strictly abide by tax laws and use VAT invoices. Although there is no national unified printing of invoices, adding anti-counterfeiting marks to invoices, and there is no need to conduct cross-checking through computer networks, the use of invoices to evade tax is limited to a very small number of unscrupulous businessmen, and is far from becoming universal and the most serious form of tax evasion. events, the operation of the invoice method is controllable, the operation is also quite simple and clear, and the cost is low. Therefore, value-added tax has become a benign tax with low taxation cost and automatic operation. It can not only obtain stable revenue for the country but also overcome the unfair effect of repeated taxation of traditional turnover tax. However, if taxpayers fail to consciously abide by the law and are only keen to use invoices to make a fuss, and want to get deductions without paying taxes, and tax evasion becomes common, then VAT will either become a tax with high taxation costs, or it will not be suitable to implement deductions based on invoices. System for deducting input tax. All systems can be used for reference, but the implementation effects are very different. This can only be explained from the perspective of cultural differences.

2. Personal income tax is levied comprehensively on an annual basis, with a collection and management system that includes self-declaration, withholding at source, key inspections, and penalties for violations.

Western personal income tax takes individuals or families as the main tax payer and the year as the time unit for tax payment. It requires taxpayers to apply excessive progressive tax rates or proportions to their entire income throughout the year after deducting statutory deductible expenses and livelihood deductions. Tax rate (few countries). However, in order to ensure a balanced tax treasury and facilitate taxpayers in arranging business and consumption activities, the methods of withholding at source and prepayment on a timely basis (such as quarterly or monthly) and year-end settlement are implemented. Source withholding is suitable for regular and periodic taxable income items (such as wages and salaries), and timely prepayment is suitable for other incomes other than salary income.

Since the tax base of personal income tax is the balance of the annual income minus expenses and livelihood deductions, and an excess progressive tax rate system is implemented, in most cases, the tax is withheld at source. and prepaid taxes that are inconsistent with the actual taxes that must be paid. A general liquidation must be carried out after the end of the tax year, and any excess will be refunded and any shortfall will be compensated. The method of general liquidation is that within a certain period at the end of the tax year, the taxpayer or his agent fills out the income tax return form in accordance with the provisions of the tax law, declares various incomes by himself, and calculates the total income, allowable deductions and personal income tax returns by himself. The tax exemption amount, taxable income amount, and tax payable amount must be investigated or reviewed by the tax collection authority, usually on a random basis. Only a very small number of returns can be randomly checked, otherwise the cost of tax collection will be too great. Therefore, one of the prerequisites for the universal and effective implementation of personal income tax is whether the vast majority of taxpayers can consciously declare and pay taxes.

⑵ In this case, the tax authorities may concentrate on dealing with a small number of tax evaders, enable key inspections to be carried out, and through severe penalties for tax evasion, create a deterrent and promote taxpayers to abide by the law. . This enables the operation of the self-declaration system to be effectively controlled, and personal income tax becomes a self-verification and self-reporting system under tax audit control. It also keeps the cost of personal income tax within an acceptable level. If the expected cost of being punished for tax evasion is very low and tax evasion is widespread, the law will inevitably fail to punish the public. Sampling audits and key inspections will not be carried out, and universal inspections will not be implemented because the cost of taxation is too high. The system of automatic declaration will be If it cannot operate, the personal income tax model with a broad tax base, progressiveness, and comprehensive levy will not be able to become a reality.

(2) The main characteristics of Western culture and its impact on the choice of tax system

The above two institutional arrangements that determine value-added tax and personal income tax to become the main tax types and their effective operation are not only It is based on the developed market economy and is based on the unique Western culture. Many countries, including many developing countries, have also implemented value-added tax and personal income tax systems. Value-added tax and personal income tax have also implemented the method of deducting input tax based on invoices and taxpayers voluntarily declare and have the tax bureau focus on inspections. However, the best way to implement , Only Western developed countries have reached an idealized level. Standardized value-added tax and personal income tax are products of a highly developed market economy and are also products rooted in Western cultural soil.

The concept of culture broadly speaking includes all material and spiritual achievements formed by human activities. However, this article adopts the narrow concept of culture and defines culture as a moral tradition composed of the mainstream values, behaviors, and rules of doing things that actually exist in a society. Different ethnic groups and countries in the West have very different cultures. The Western culture referred to in this article refers to the moral tradition that mainly originated in the United Kingdom and Germany and was inherited and developed, including mainstream values, behavior and rules of doing things, especially the basic norms and mechanisms for dealing with relationships between people, also known as capital. spirit of doctrine. Its basic characteristics are as follows:

⑶In our view, making money is just a means rather than an end. Making money is for consumption and enjoyment. But according to Weber’s analysis, what constitutes the spirit of capitalism is precisely the belief that making money itself is the ultimate goal and making money is a divine obligation. People do not make money because they have no money, and people do not work because they are poor. A person survives for his career, not for his survival. Weber believed that this seemingly counterintuitive spiritual temperament was the core of the capitalist spirit and the highest test standard for success in life.

2. Value is obtained from internal channels, rather than tested from other people’s evaluations. In interpersonal relationships, Westerners do not pay too much attention to other people's opinions and evaluations as Chinese people do, that is, they pay too much attention to "face." Westerners pay more attention to being straightforward and consistent in their pursuit of economic interests and dealing with others, and are less likely to ignore the actual situation in order to support face. It manifests as more individuality and innovation, less obedience to authority and conformity to the crowd; social psychology that advocates individuals to obtain social status through legal struggle and less reliance on power, comparison, exaggeration, and excessive emphasis on formalism is absent. Become a cultural mainstream factor.

3. The means of pursuing economic success are rational and based on strict accounting, and have the characteristics of focusing on precision in life and behavior. This has led to a general emphasis on efficiency, that is, on saving time and comparing input and output. The universalization of rational accounting has made Westerners sensitive to price signals and often care about everything. The "economic man" hypothesis of classical economics is basically consistent with the facts, forming an economic operating mechanism that focuses on quality.

⑷In addition to fierce competition in the pursuit of economic interests, there are also widespread cooperative relationships based on trust in Western culture. It is both a selfish culture and a culture of cooperation and trust based on associations. .

If a market economy only has competition but no trust and cooperation, it will be impossible for this market economy to play its fundamental role in allocating resources.

Westerners regard the pursuit of economic interests as the purpose of life rather than as a means, which makes their interpersonal relationships pay more attention to mutual benefits and long-term development, and emphasize sociality, credibility and honesty. Pay attention to the concept of cost and be sensitive to price signals in the economic field. When this tradition is brought to the political and legal field, it becomes a matter of focusing on precision and certainty, making laws, doing things, considering details, thinking deeply, and making specific provisions, so the law is detailed. Whether it is a civil law system or a common law system, the impact of law on society The regulation of life is very certain, everything has specific and clear legal provisions, and the law is highly enforceable. With economic interests as the center, Westerners have very clear boundaries of interests between individuals and even among family members. They value profits over righteousness, and value principles over emotions. Westerners are straightforward in speaking and dealing with people, and they do not care about human feelings and have no fear of losing face. When everyone defends his or her own interests without showing mercy, democratic consciousness, democratic actions, and democratic systems can be formed. The law becomes the yardstick and the most basic principle that regulates relationships between people. Legislators, judges, and law enforcers can effectively supervise, and officials' violations of the law can be effectively curbed in the first place. Both tax administration and tax payment focus on legal provisions rather than "human relationships". We emphasize that everyone is equal before the law. The enforcement of tax laws and the penalties for tax violations are strict and are generally not affected by human relationships. They have no legal issues. The habit of talking about affection and building relationships. In this case, the expected cost of penalties for violations is very high, and there is widespread fear. Once tax evasion is discovered, you may be fined and bankrupted, which is unkind, and will also become the target of public opinion. Tax officers are also very responsible when handling tax cases. Disputes between tax collectors and taxpayers are not resolved through negotiation or "leadership" intervention, but through independent review and court trials. Both parties to the collection and collection are equal before the law, and their rights and obligations are very clear and guaranteed. Although tax evasion has been repeatedly banned, due to strict tax law enforcement, severe penalties for tax evasion, and the role of public opinion supervision, taxpayers' awareness of tax obligations, the general concept of law-abiding, and the stigma of tax evasion have been established. This makes the expected cost of being punished for breaking the law very high for most taxpayers. If they strictly abide by tax laws, that is, consciously use VAT invoices in accordance with the law (without uniform printing and adding anti-counterfeiting marks) or consciously declare their income on time, tax evasion is limited to a few. People are far from universal, which is the prerequisite for the effective operation of the input tax deduction system based on invoices and the active personal income tax declaration system.

2. The incompatibility between the Western tax system model and China’s unique culture

(1) The ineffectiveness of the Western tax system model in China

1. Value added The ineffectiveness of the system for deducting input tax from tax invoices. In the tax reform in 1994, my country completely abandoned the accounting method and fully introduced the invoice law of Western countries, and set up a special value-added tax invoice system. The special VAT invoice is placed in a decisive position in the calculation and management of VAT, and stricter regulations on invoice management are formulated than in Western countries. Not only are unified printing, paper type, and format implemented, but there are also strict regulations on receipt and strict storage measures. It is said that taxpayers have to go through 18 procedures to obtain special VAT invoices. The regulations on the management of special VAT invoices are no less than the VAT regulations. itself. Use modern high-tech and strengthen management measures at all costs. In order to severely crack down on criminal activities related to VAT invoices, more than 100 criminals have been sentenced to death. However, the criminal behavior of special VAT invoices has not been effectively curbed. The spread of crimes involving special VAT invoices has resulted in a large loss of tax revenue and serious unfairness, making it difficult to achieve the original intention of VAT design, and the tax law provisions are far from the actual implementation results.

⑸This view is specious. Under the traditional circulation tax system, the only way to evade taxes is to hide sales revenue. Now, in addition to this way, special invoices have been added.

The system of deducting input tax based on invoices, which has been implemented very successfully in Western countries, has encountered outstanding contradictions that are difficult to solve when implemented in our country. The operation effect is not good but the cost is very high, making the value-added tax become It is very complex and does not have the advantages of simplicity, ease of implementation, less tax evasion, and low taxation costs like the value-added tax in Western countries. It seems that the success of the system of deducting input tax based on invoices cannot rely only on management (the stricter the management, the greater the cost), but also on taxpayers' voluntary compliance with the law and automatic operation of the statutory system. To achieve this, we need to have a common social psychology and mechanism in which the expected cost of being punished for breaking the law is high, and such social psychology and mechanism can only exist in Western developed countries at present.

2. The ineffectiveness of personal income tax self-declaration and sampling inspection management methods. If personal income tax is to be widely implemented and become the main tax type, due to the large number of taxpayers, it is impossible to implement a special account management method like the management of turnover tax. Instead, a method of voluntary declaration by taxpayers and sampling inspection by the tax bureau must be implemented. It can be said that the widely implemented personal income tax is naturally based on taxpayers' voluntary declaration. If it is impossible to establish or implement a proactive and conscious declaration method for taxpayers, it is impossible for personal income tax to become a universal tax.

In order for taxpayers to take the initiative to declare, three related issues must be solved: First, what should taxpayers do if they are unwilling to declare? Second, what should I do if the amount of declarations is too large? Third, what should the taxpayer do if the declaration is incorrect?

There are two logical ways to solve the problem of taxpayers’ reluctance to declare. First, filers will benefit by linking declaration with social welfare. The more personal income tax declared and paid, the more benefits they will receive in the future. The more treatment you get. But this is based on the establishment of a universal social insurance system, which is currently difficult to achieve. Even if there is a relatively common social insurance system in some local areas, taxpayers will still weigh the benefits of not declaring them against the social insurance benefits obtained by declaring them. It may be more advantageous for wealthier people to choose not to declare them. The second way is to put those who do not declare in trouble and make the expected cost of being punished for non-declaration very high, thus making taxpayers afraid not to declare. However, this condition does not currently exist in our country.

In order to make the personal income tax system universal, on the one hand, everyone with income is required to declare, and a mechanism to force or stimulate voluntary declarations must be established; but on the other hand, taxation is costly, and the amount of declarations is too large. Especially if the number of small-amount income declarations is too large, it will not only fail to achieve the revenue or adjustment purpose of personal income tax, but will also significantly increase tax costs, making the tax bureau do a lot of useless work, or even be unable to cope with it. Therefore, from the perspective of tax costs, the amount of declarations must be limited. The ideal situation is for high-income earners to declare and low-income earners not to declare. However, it is also very difficult to determine who is a high-income earner and who is a low-income earner.

Solving the problem of false declarations is more difficult. Which returns may be false? What should you do if you discover large-scale false returns? Universal auditing is beyond the human and material resources of the tax authorities. If only a small number of sample audits are performed (like those in Western developed countries), it will encourage tax evasion and tax evasion.

None of the above three problems can be solved by strengthening management. Even if a highly modern computer network is used, it can only play a supporting role. This shows that declaration can only be based on consciousness, and it is difficult to succeed simply by relying on management.

Therefore, the system of deducting input tax based on invoices and the active declaration of personal income tax and the focused inspection and collection management model of the tax bureau that can be operated in Western countries are difficult to succeed in our country. The fundamental reason is that such a The tax system model is incompatible with the actual culture of our country.

3) System design of Chinese-style personal income tax

⒁1. Low tax rate burden policy. The burden policy is first reflected in the tax rate. The determination of the tax rate not only involves the core issue of tax system design, the level of tax burden, but also has a critical impact on the operation of the tax system. In the historical period when our country is still in the primary stage of socialism, the degree of monetization and book-keeping of various incomes is not high. Even if the pace of reform is accelerated, this situation cannot be completely changed in a short period of time. At present, personal income tax can only Mainly aimed at those who receive monetary income on the books. In this case, if the tax rate is set too high, taxpayers will feel that the sacrifice is too large and unfair, which will often prompt them to choose to hide their income (such as not requiring excessive wages but requiring higher actual benefits). ) or require net income after taxes in the deed. In the current society, people who can obtain high book currency income generally have special skills and are in a "seller's market" position in market transactions. Passing personal income tax to employers is often successful. The emergence of this situation means that the policy goal of adjusting high incomes with high tax rates, especially high marginal tax rates, is difficult to achieve. The traditional view is that if personal income tax is to assume the responsibility of regulating income distribution, it must implement a high tax rate and multi-level progressive tax rate system. Practice has proved that this view is biased. High tax rates and multi-level tax systems are often difficult to implement, and a tax system that is difficult to implement will not be able to achieve its stated regulatory goals. Taxpayers' general views on the tax system are an important factor in determining the success of the tax system. Once taxpayers generally feel that the sacrifices of paying taxes honestly and in accordance with the law are too heavy, such a tax system cannot exist for a long time. Therefore, to implement the income distribution function of personal income tax, we must also follow the tax governance ideas of low tax rate and broad tax base in selecting burden policies. The low tax rate prevents taxpayers from feeling too great a sacrifice when paying taxes, which is conducive to conscious tax declaration, reduces the concealment of income, and paves the way for the establishment of a personal income tax file and statistical information basis. After more than ten years or more of accumulation, a detailed, true and comprehensive information base on personal income can be formed. The fairness goal of personal income tax and the improvement of collection and administration efficiency are based on comprehensive, systematic and true information. Low tax rates can easily expand the tax base and improve collection and administration efficiency.

2. A multiple collection method with source withholding as the main body. my country's future personal income tax collection method should also be Chinese-style, with source withholding as the main method. The model is neither classified nor comprehensive, nor is it a mixed system in the traditional sense. Most taxpayers are subject to unclassified levy and withholding at source. In fact, it is the improvement and legalization of the fixed-rate or fixed-amount collection methods currently in practice. Considering the imbalance of my country's economic development, the existence of multiple collection methods should be allowed, and standardized collection methods and simple collection methods should coexist. It is necessary to carefully study the actual collection methods at the grassroots level, and absorb their reasonable and effective core into the provisions of tax laws in accordance with the principle of eliminating the rough and retaining the essence. They cannot be dismissed as non-standard practices and banned entirely. However, the tax law must clarify the applicable conditions for various methods.

For example, in more developed places, personal income tax collection can be linked with social insurance payments. The first method only allows employees’ personal income tax and social security tax wages that are withheld and paid by the enterprise to be included in the cost, canceling the standard salary deduction method; the second method, the enjoyment of social insurance benefits is not only linked to social insurance taxes , and it is linked to the payment of personal income tax. When the unit withholds tax at source, it must also issue a tax bill to the taxpayer, and record the payment of personal income tax in his account according to the personal social insurance account number. In principle, the more personal income tax you pay, the more insurance benefits you will enjoy. Other underdeveloped areas can implement fixed-rate or fixed-amount deduction methods or other more effective methods summarized in practice.

3. Minimum tax system for high-income groups. In order to solve the difficult problem of tax collection and administration for high-income earners other than salary earners (such as celebrities, businessmen, government officials, and famous professors), the author recommends the implementation of a minimum tax system or management method with Chinese characteristics. That is, according to certain standards, for example, private entrepreneurs determine the minimum tax base by region based on their annual turnover or the amount of employee wages paid or the amount of working capital, and based on industry profitability; actors, athletes, etc. are based on sample surveys. Annual income is divided into levels and different minimum tax bases are determined. After they choose to pay taxes, they announce it to the society. If a first-class actor chooses a tax level below second class, he will depreciate himself, which will form a constraint; government officials can The minimum tax base is determined by comprehensively considering salary income and official welfare income; well-known professors and other celebrities also determine a number of tax base levels through a sample survey of all their income. After the grade is determined, they can choose at their own discretion and be levied at a minimum tax rate of 5%. If the taxpayer feels that paying more tax according to this method is more than according to the standard method of declaration, he can choose the declaration method and the overpaid tax can be refunded.

References

(1) Government Accounting Office (GAO), 1998, Tax Administration: Assessment of IRS Audit and Criminal Enforcement Rates for Individual Taxpayers Across the Country, GAO/GGD, 99, 19, 1998.

(2) J. K. Fairbank, The United States and China, The Viking Press, 1962.

(3) Ellen. A. Tait, "International Practice and Issues of Value-Added Tax", China Finance and Economics Press, 1992 edition.

(4) Cao Jinqing's "China by the Yellow River", Shanghai Literature and Art Publishing House, 2000 edition.

(5) Fairbank "The United States and China", World Knowledge Press, 1999 edition.

(6) Francis. Fukuyama "Trust", Hainan Publishing House 2001 edition.

(7) Jin Yaoji, "Chinese Society and Culture", Oxford University Press, 1993 edition.

(8) Max. Weber, "Protestant Ethic and the Spirit of Capitalism", Joint Publishing House, 1987 edition.

(9) Qian Mu "Nation and Culture", New Asia Academy 1962 edition.

(10) Yang Bin "Comparative Tax System", Fujian People's Publishing House, 1993 edition.

(11) Yang Bin "The Infeasibility of the Western Model Value-Added Tax and the System Design of the Chinese Value-Added Tax", "Management World" Issue 3, 2001.

(12) Yang Bin "The Infeasibility of Western-style Personal Income Tax and the System Design of Chinese-style Personal Income Tax", "Management World" Issue 7, 2002.

(13) Zhang Chunan, "Managing Chinese", China Economic Press, 1996 edition.

(14) China Taxation Society's "Improving Value-Added Tax Issues" Research Group, "Research Report on Improving Value-Added Tax Issues", "Taxation Research" Issue 1, 1999.