In the first four months, the growth rate of personal tax revenue rarely declined, what is the reason?

Author: Chen Yizhen

Personal income tax related to the "money bags" of ordinary people has always attracted much attention, and since this year, the growth of personal tax income has rarely been sluggish.

On May 5, the Ministry of Finance released data showing that in the first four months of this year, personal income tax was 18.4 billion yuan, down 5384.2% year-on-year.

The first financial reporter combed through the tax data in the first 2010 months since 4 and found that except for the decline in individual tax revenue in 2012 and 2019 due to the tax reform and reduction measures in 4, the first four months of other years basically maintained a double-digit high growth rate. Even with the outbreak of the epidemic in 2020, the income from personal tax in the first four months of that year maintained a slight increase.

This means that excluding the years of policy reduction due to the individual tax reform, the growth rate of individual tax revenue in the first four months of this year hit a new low in more than a decade. Why has there been negative growth in IIT revenue since the beginning of this year?

Luo Zhiheng, chief economist of Guangdong Securities and president of the research institute, analyzed that the decline in the growth rate of individual tax is related to the macroeconomic situation, the optimization of social salary structure and the declaration of deduction items.

He explained that the macroeconomic situation directly affects the unemployment rate and the real estate situation, and the employment situation in the first quarter of this year, especially youth employment, is still generally sluggish, and naturally the payment of individual tax is low, while the real estate situation is still in the process of recovery, and the corresponding individual tax is also low.

According to the National Bureau of Statistics, the national urban survey unemployment rate was 4.5% in April, down 2.0 percentage points from the previous month and close to the pre-epidemic level in 1. Despite the overall improvement in the current employment situation, youth unemployment remains high. In April, the urban unemployment rate for the 2019-4 year old labor force was 16.24%.

Luo Zhiheng believes that in recent years, some industries with abnormally high salaries have made salary adjustments, such as deferral and downward adjustment, and some regional institutions are subject to financial factors and subsidies, etc., which has also had an impact on the growth of individual tax revenue.

For example, affected by the adjustment of the real estate market, among the 19 industry categories in China last year, the real estate industry was the only industry where the average wage declined. Since the beginning of this year, the salary cuts of some banks, securities firms, Internet companies, etc. have also attracted market attention.

Luo Zhiheng said that since March this year, some taxpayers have carried out individual tax calculations and settlements, and with the gradual improvement and popularization of tax declarations, and the impact of residents' balance sheets in the three years of the epidemic, the awareness of declaration and deduction has increased, and tax refunds have increased, which may also bring about a short-term decrease in individual tax income.

Beijing is a city with strong tax revenues. According to data from the Beijing Municipal Bureau of Finance, Beijing's individual income tax reached 218.1 billion yuan in the first quarter, down 1.2%, mainly due to the annual reconciliation of comprehensive income, the increase in taxpayers' declaration of "special additional deductions", and the increase in the scale of tax refunds processed to taxpayers.

Wang Weiqing, an industry tutor of the tax degree at the School of Economics of Fudan University, told First Finance and Economics that the growth rate of residents' income in the first four months of this year still maintained growth, while the growth rate of individual tax income declined, which may be related to the new special additional deduction for individual tax for infant care expenses and the deduction for individual pension tax, which will lead to a decrease in individual tax income. Since March this year, the 4 individual tax will be calculated and paid, and some taxpayers will supplement the declaration of deduction items, which will also appear like the increase in the scale of tax rebates in Beijing, and the income from individual tax will decrease.

According to data from the National Bureau of Statistics, in the first quarter of this year, the per capita disposable income of residents in the country was 10870,5 yuan, a nominal increase of 1.3% over the same period of the previous year, and the actual increase was 8.<>% after deducting price factors.

Of course, since the current IIT threshold is set at 6,1 yuan a year, superimposed on special additional deductions, etc., most individuals in China do not need to pay IIT, and some experts say that the number of people who really pay IIT is about <> million.

From the perspective of the income structure of individual tax, there are not only labor income from ordinary people's salaries, salaries, labor remuneration, but also capital income such as interest, dividends and property transfers.

It is understood that the growth rate of individual tax income in the first four months of this year declined, of which the income from the transfer of restricted shares fell more.

Wang Weiqing said that perhaps after the lifting of the ban on the shares of some companies in the same period last year, some people transferred restricted shares in order to "drop their bags for safety", and the corresponding individual tax income was more, and this year this situation has decreased, and the corresponding individual tax income has decreased significantly.

From the monthly data, the decline in personal tax revenue has narrowed this year, of which the income tax revenue increased in April (4.8%). Will IIT revenue continue to grow in the future?

Luo Zhiheng believes that it is necessary to rationally view the decline in personal tax revenue, which may be related to the decline in income, or it may be that the base is high due to accidental factors in the early stage. If the latter is the case, when the one-time factor is eliminated, the personal tax will also increase with the increase in income.

Fu Linghui, spokesman of the National Bureau of Statistics, recently publicly said that with the full return to normal operation of the economy and society this year, the labor participation rate has steadily increased. In the past, due to the impact of the epidemic, some labor forces temporarily withdrew from the labor market, but recently many labor forces have returned to the job market. Under such conditions, the national urban survey unemployment rate has also shown a downward trend, indicating that the employment situation is improving. In particular, the urban survey unemployment rate for the 4-25 year old employed in April was lower than the pre-pandemic level in 59.

Fu Linghui said that in the next stage, with the implementation of the employment stabilization policy, the employment situation is expected to continue to improve. The steady improvement of employment is conducive to maintaining economic operation in a reasonable range, increasing residents' income, enhancing consumption capacity, and giving play to the role of consumption in driving economic growth.

The improvement of the employment situation in the future will also be conducive to the steady growth of personal tax revenue. According to the 2023 central budget, the central finance expects this year's IIT revenue budget to increase by 9.6% compared with last year's implementation figure. According to this expectation, the later personal tax revenue is expected to continue the upward momentum.

Luo Zhiheng said that the proportion of China's individual tax revenue to tax revenue is not high overall, which is determined by China's tax structure, and in the future, it is necessary to further promote the collection model from a combination of comprehensive and classified to a thorough syndrome income, and realize the same collection of labor and capital income.

In this year's central and local budget reports, it was mentioned in this year's fiscal reform and development work that it was mentioned that it was necessary to study and optimize the scope of comprehensive income taxation of personal income tax and improve the special additional deduction items.

A number of financial and tax experts told First Finance and Economics that this means that China will carry out a new round of individual tax reform. Under the goal of common prosperity, China needs to give full play to the adjustment effect of income distribution of individual tax, so it needs to gradually expand the scope of comprehensive income, and which income categories are included is the focus of further research. In addition, with the economic and social development, the six special additional deduction standards and deduction methods introduced in 2019 can also be further improved, better reflecting the principle of affordability.