Data figure: Enterprise production workshop. China News Agency reporter Liang Tingshe
Xu Shanda: There is still a lot of room to cut taxes and fees
China News Weekly reporter / Zhao Yiwei Wang Quanbao
"This year, we must give priority to stabilizing employment and protecting people's livelihood." Comprehensive research and judgment on the current situation, this year's government work report made such a statement.
The report pointed out that whether it is to maintain employment and people's livelihood, achieve the goal of poverty alleviation, or prevent and resolve risks, there must be economic growth support, and stable economic operation is related to the overall situation. It is necessary to use reform and opening up methods to stabilize employment, protect people's livelihood, promote consumption, boost the market, stabilize growth, and embark on a new way to effectively respond to shocks and achieve a virtuous circle. To protect employment and people's livelihood, we must stabilize hundreds of millions of market players and try our best to help enterprises, especially small, medium, and micro enterprises, and individual industrial and commercial households overcome difficulties.
To stabilize employment and protect people's livelihood, this is also the focus of Xu Shanda, an expert from the Joint Research Institute of Finance and Economics, a member of the China Economic 50 Forum, and the former deputy director of the State Administration of Taxation. He believes that under the current situation, ensuring employment and people's livelihood, especially solving the employment problems of small and medium-sized enterprises and ordinary labor force, are now the most important and urgent issues.
"Employment and people's livelihood are issues related to the overall economic strength. To stabilize the economy, the first task is to stabilize employment." Xu Shanda said in an exclusive interview with "China News Weekly", "Further increase tax and fee reduction efforts, expand ordinary Employment of labor, expansion of consumption and investment are all important measures to stabilize employment and protect people's livelihood. "
China News Weekly: In this government work report, it is proposed to increase tax cuts and fee reductions, continue to implement the system of lowering the value-added tax rate and corporate pension insurance rates, and add about 500 billion yuan in tax reductions and fees. What do you think of this?
Xu Shanda: At present, the macro tax burden is still generally high. The current judgment holds that the competitiveness of the national taxation system is still insufficient, so tax cuts and fee reductions must continue. The idea that no more tax and fee reductions can be made is unrealistic.
Starting from the full launch of the “VAT Reform” pilot in 2016, the central government ’s judgment on the level of macro tax burdens has changed from stabilizing macro tax burdens to reducing macro tax burdens, and has determined a major strategic adjustment for tax reduction and fee reduction. Until now, it is still the central government's decision to continue to reduce the level of macro tax burdens and continue to increase tax and fee reductions.
It should be noted that when judging the level of macro tax burden, it is unscientific to directly compare the tax burden percentage with foreign countries. Fundamentally, the judgment of the tax burden level is a political judgment, which should be comprehensively judged from four aspects: one is national security, the input of national defense and military must be considered; the second is the welfare of residents, and the expenditure of medical education must be considered; the third is administrative management. Administrative scope and efficiency should be considered. Fourth, the international competitiveness of the economy. This factor is particularly important in the current US trade war with China.
At this stage, changes in the international competitiveness of our economy are the key to supporting changes in taxation policies. Tax cuts and fee reductions are important measures to support economic development, and are of particular significance to the manufacturing industry. With the development of globalization for many years, the competitiveness of the tax system has become more prominent. In the context of globalization, enterprises in any economy are operating within the tax system of a country or an economy, but they must participate in market competition around the world. If the tax system of this economy lacks competitiveness, economic development will suffer. Constraints. After the United States implemented substantial tax cuts, China's tax competitiveness is generally lower than that of the United States. Therefore, China's tax cuts and fees will continue.
China News Weekly: In the first quarter of this year, a total of 742.8 billion yuan in tax cuts and fees were reduced across the country, superimposing the large-scale tax cut and fee reduction effect of more than 2.3 trillion yuan last year. How much room is there for tax cuts and fees?
Xu Shanda: Some of the taxes that have been waived are actually reduced, and some are postponed. From the current situation, there is still a lot of room for tax reduction and fee reduction.
First, solve the problem of retention tax deduction and expand the scale of tax rebates. The scale of the current tax deductions has exceeded one trillion yuan. After the "camp reform", it has risen rapidly, and the growth rate is higher than the tax growth rate, which has washed away the dividends of some high-tech heavy asset enterprises. In essence, the tax deduction is the government ’s liability, which is equivalent to the government occupying the company ’s funds. This prepaid tax will inhibit the company ’s investment, especially for high-tech and heavy asset companies. In the past two years, the government has been implementing tax refunds for tax deductions through general budget revenues. However, due to difficulties in budget revenue and expenditure, the scale of tax refunds is only 100 billion yuan. Therefore, our research institute recommends that special treasury bonds or special treasury bonds be refunded all at once, and the interest is borne by the government. In this way, the entire national economy can save tens of billions of costs, which can greatly reduce the financing cost burden of high-tech heavy asset companies .
Second, further deepen the reform of the tax system and increase support for corporate R & D. At present, comparing the tax gap between the US and China in R & D investment, one-third of the U.S.'s overseas return tax will flow into R & D. In 2018, R & D investment in science and technology resources accounted for more than 4% of GDP, while China's investment accounted for only 2.17% in 2019, and the gap in total investment was even greater. Therefore, after the GSP system lowers the tax rate and cuts taxes, China will further increase taxation investment in scientific and technological research and development to better encourage and guide enterprises to increase their scientific and technological content. For example, the additional deduction of income tax, that is, the enterprise ’s investment in R & D expenses, is deducted from 150% before tax, and is now increased to 175%. It is recommended that this ratio be increased to 200%, 250%, or even 300% in the future.
Third, further improve the tax reduction structure and continue to reduce the tax burden of high-tech heavy asset enterprises. At present, China emphasizes economic transformation, that is, high-quality development, and the core is to increase the scientific and technological content of economic development. The government needs to guide enterprises to increase investment in product technology to meet the needs of the global market. For example, the current maximum personal income tax rate for wage income is 45%, which is much higher than that in developed countries. In fact, higher taxes are imposed on high-tech talents, which also increases the labor cost of high-tech enterprises. It is recommended to reduce the tax rate and reduce taxes. File, expand the step. In addition, the current national social security contribution rate is generally higher than 35%, which can be further reduced. These measures can reduce taxes on high-tech talents and reduce the cost of high-tech talents of enterprises, so as to better guide or support enterprises, encourage enterprises to hire high-tech talents, and increase technological content.
China News Weekly: What are the key areas for tax and fee reductions next?
Xu Shanda: When the government considers fiscal and taxation strategies, it is necessary to find a balance between the competitiveness of Chinese enterprises and the needs of fiscal and taxation. At present, I think we need to focus on two important areas of finance and taxation-consumption tax and social security premiums.
The first item is about consumption tax. A few years ago, we suggested that the state adjust the taxation link of the consumption tax to levy it at the retail link. As early as 1994, the state planned to formulate policies related to consumption tax, but the collection capacity was limited at that time, and the collection link was only advanced to the production and wholesale link. After the full implementation of "VAT reform" in 2016, consumption was particularly encouraged. The consumption tax was changed to the retail environment and changed to local tax. The more consumption, the more government consumption tax. This has greatly changed the guiding role of my country's economic development and is in line with the spirit of the central government. Taking the automobile industry as an example, if the consumption tax is moved to the retail link in the future, manufacturers will not need to pay taxes, which can reduce financing costs. Local governments will encourage local residents to spend more. In short, the backward movement of the consumption tax collection link is not simply a change in the collection link, it has a lot of guidance in the macro link.
The second item is about social insurance premiums. The state has decided to transfer the state-owned capital to the social security fund, but the progress is not fast, and it is lack of resources to continue to reduce social security contributions. The state also decided to institutionalize the sub-provincial co-ordination into the national co-ordination, but the completion time has not yet been determined. There are two key factors in the formation of China's social security system. The first factor was that when the social security system was formulated in 1998, the central government set a relatively high rate. Now it is very difficult to lower the rate, but it must be kept down. At a level that is basically compatible with most countries in the world, although the social security contribution rate is the contribution of employees, it is still an important part of the labor cost of enterprises. The second factor is the issue of the system. The social security system in developed countries is unified across the country. When China first formulated the social security system, the central government at that time was unable to undertake the overall national social security system. Move down to the place. Local co-ordination solved the problems of laid-off workers and the difficulty of central finance at the time, but, after all, it was uncoordinated with the national unified market. In particular, this caused a large number of migrant workers to enjoy social security policies.
In addition, after the full implementation of "VAT reform", there is no main tax in the local tax system. Considering that other taxes have not become the backbone of the local tax, our research institute suggested that the consumption tax can be used as the main tax of the local tax system a few years ago. Motorcycles and other tax items that are convenient for local supervision and collection, while increasing the central share of value-added tax. In this way, by adjusting the tax structure and adjusting the fiscal expenditure structure, a new fiscal and taxation system for the entire central and local governments can be formed. This is a multi-party beneficial solution.
China News Weekly: This government work report proposes that this year we must give priority to stabilizing employment and protecting people's livelihood, and try our best to help enterprises, especially small, medium and micro enterprises, and individual industrial and commercial households overcome difficulties. How to implement this policy idea? How to evaluate the actual effect of the burden reduction measures that have been introduced?
Xu Shanda: Under the current situation, ensuring employment and people's livelihood, especially solving the employment problems of small and medium-sized enterprises and ordinary labor force, is now the most important and urgent issue. Not to mention the economic growth target this year is to put employment first, and employment and people's livelihood are issues related to the overall "economic strength". To stabilize the economy, the first task is to stabilize employment.
First, we must further increase tax and fee reductions, reduce the debt ratio and financing costs of enterprises, reduce the employment burden of enterprises, and stabilize the employment of enterprise employees.
Secondly, it is necessary to expand the employment of ordinary labor, and encourage the development of industrial chain employment through investment projects, investment industries, and encouraging the development of high-tech and heavy asset enterprises. At present, China's leverage ratio is still within the tolerable range. It is possible to consider issuing long-term national debt of 10 to 15 years to solve the problem of insufficient fiscal investment budget.
In addition, it is necessary to fully mobilize new resources to enter the market and promote employment and economic growth in the industrial chain. At present, China still has many resources that have not entered the market, including land and rural homesteads. Now the country proposes that cities with a population of less than 3 million be released and settled down, just to mobilize these resources and enter the market. For the economic growth of the entire country, this part of the newly injected resources in the market can create new opportunities and wealth, from resources without market value to resources with market value. This is a very important development strategy in China.
China News Weekly Issue 19, 2020
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