Article/Jia Kang of China Economic 50 People Forum
One of the main reasons for the widening income distribution gap and the polarization of China's current property allocation pattern is the asset stock and stock premium formed by housing. As a direct tax, the real estate tax is obviously an optimization mechanism to adjust income distribution and property allocation, which can reduce the negative impact of polarization on society.
Real estate tax can adjust the gap between the rich and the poor Recently, the real estate tax, which was included in the legislative plan of the National People's Congress and once again attracted the attention of the public, refers to the tax on real estate ownership (or retention), including the consumption of residential housing. The key to its reform is to make some tax adjustments on the consumption of housing retention from scratch. The Third Plenary Session of the 18th CPC Central Committee called for "accelerating the legislation of real estate tax and promoting reform in due course", which is the most authoritative guidance of the decision-making level after the simulated idling in the name of property tax and the reform pilot in the name of property tax in Shanghai and Chongqing a few years ago.
On the premise of legislation first, we should rationally view that real estate tax can promote the balance between supply and demand of the real estate industry and increase effective supply, promote the transformation of local government functions and strengthen financial resources, adjust the distribution of national income and optimize property allocation, increase the proportion of direct taxes to reduce tax pain Five positive effects that are conducive to China's economic development, such as promoting the construction of democratic financial management and legal financial management system, should also be rationally discussed about some disputes about this tax.
One of the positive effects: promote the balance between supply and demand and increase effective supply
If we regard the real estate industry and the construction industry as an important part of the national economy, we can say that they will still be the pillar industries of the national economy in the process of urbanization in the coming decades. However, in addition to the marketization track, the development of the real estate industry also has a basic security track. The two must coordinate and coordinate to guide the healthy development of the real estate industry in the market economy environment.
After several years of operation of the new policy for real estate regulation, there are still many contradictions. To deal with this contradiction, we need to systematically follow the relevant systems and policies, integrate and optimize all taxes and fees in the whole process from land development to real estate transactions including housing, to housing tenure, and implement reasonable supporting reforms.
On the issue of real estate regulation that the public pays attention to, if we want to reflect the fundamental level of the "new regulation policy", the system construction cannot be ignored and avoided. The key to straighten out the system construction and form a long-term mechanism is to shape the tax in the tenure link and reasonably coordinate with the tax burden in the land development and real estate transaction link.
As an important internal part of the whole tax reform, the real estate tax reform is related to the healthy development of the pillar industries of the national economy and thus forms a long-term support force, and also involves the actual interests of thousands of households and the harmony and stability of the whole society. This tax has developed from scratch in the housing ownership link, which will affect the interest expectations and behavior choices of stakeholders in all aspects of the real estate market, and promote a more balanced supply and demand in the real estate market. Under the assumption that the whole society will not increase investment, many of the original vacant houses will also enter the market for leasing or trading.
In terms of resource allocation, this is of course a good thing to increase effective supply, which will reduce the upward momentum of house prices. On the whole, it is not enough to change the basic shape of the rising curve of real estate prices in the urban central area during the process of our urbanization, but it can make the slope of the curve lower, the bubbles less, and the threats and adverse effects of ups and downs in the development process less.
The second positive effect: promoting the transformation of local government functions and strengthening the construction of financial resources
At present, China's local tax system is far from being formed. Since the operation and evolution of the tax system framework established in 1994, the maintenance of the tax distribution system from the central government to the provinces represented by the provinces has mainly relied on the "one size fits all" sharing tax, which has standardized the tax sharing standards from Beijing, Shanghai to Tibet and Qinghai: in terms of major taxes, 75% of value-added tax belongs to the central government and 25% to the local government; The business tax is nominally owned by the local government, and the business tax of financial institutions is divided according to the affiliation relationship.
Although this sharing tax based framework maintains the basic normalization of tax classification, the normalization below the provincial level is seriously lacking. We made a list of the sub provincial systems in each provincial administrative region, and found that even in the developed regions, the tax sharing system has not really entered the state, but the various, complex and volatile, bargaining color is still very strong.
In recent years, there have been endless criticisms of local grass-roots financial difficulties, local astronomical hidden debts, and local land finance trends that are very obvious in short-term behavior. There are indeed institutional reasons, but they are not caused by the tax sharing reform in 1994 - because the fiscal system arrangements at all levels below the provincial level have not really implemented the tax sharing system.
It is the financial system below the provincial level that still continues to have a variety of poorly standardized sharing and contracting systems, which, together with other factors, has led to bad problems such as grass-roots financial difficulties, local implicit debt and land finance. To solve this problem, the way out is to make the fiscal system below the provincial level actually implement the tax sharing system.
The rationalization of the local tax base and the construction of the main source of finance pillar taxes are closely related to the real estate tax or real estate tax that is most suitable for local control. The reform of the real estate tax can help solve the problem of the unformed local tax system in China, provide pillar taxes for local governments, and then implement the tax distribution system below the provincial level, so as to promote the transformation of government functions and the healthy market economy.
The concept of real estate tax can be broad or narrow. In a broad sense, real estate tax refers to all taxes related to real estate, and in a narrow sense, it refers to taxes on real estate ownership. Americans call real estate tax property tax or real estate tax. It is the most important tax of the local government in the United States, which comes from the housing tenure link, and the tax base will be reassessed every once in a while. The local government will decide the specific collection plan and tax rate through the legislative process and the annual budget process.
The real estate tax has become the main financial source of local governments, so as long as local governments maintain the operation of the market economy, optimize the local investment environment, and improve the local public service level, the financial source construction problem will naturally be solved - under this effort, the real estate in the jurisdiction will enter the appreciation track, Local governments do not need to focus on short-term behavior and other financial resources to solve the main financing problem of expenditure.
As long as the local government plays the public functions required by the market economy in a down-to-earth and impartial manner, the problem of pillar financial resources in the whole financial distribution system will be solved at the same time, which is caused by endogenous factors to transform functions and build incentive compatible optimization systems.
Therefore, for the local tax system, the construction of this tax system is very important. The real estate tax is most suitable for local governments to fully consider how to optimize the local investment environment and improve the level of public services. While consciously implementing the function transformation, the problem of local financial resources construction has also been solved along with the mechanism of reassessing the tax base every other period of time, that is, the integration realization of the dual goals of local government function transformation and financial resources construction has been harmoniously combined.
The third positive effect: adjusting income distribution and optimizing property allocation
The income distribution effect is closely related to the evolution of property allocation since China's reform and opening up. The two concepts of income and property go hand in hand in the current income distribution pattern. Many income cash flows are closely related to the income, premium and influence generated after property allocation. Moreover, due to the role of property allocation, the gap between the actual income of many social members has further expanded.
One of the more profound problems, which is also a matter of great popular discontent, is the disorder and injustice of income distribution and property allocation order. about ordinary people As far as it is concerned, it is acceptable for some outstanding entrepreneurs, scientists and successful people in sports and literature and art circles to have high incomes or receive heavy awards. The most indignant issues are injustice and corruption.
But today, let's put aside the problems of injustice and corruption. In the field of property allocation related to housing, just because of the different financial lines, there may be great differences. In fact, many "ordinary people" in China have a large stock of assets, which is closely related to their housing investment preferences in personal finance. One of the main reasons for the widening income distribution gap and the polarization of China's current property allocation pattern is the asset stock and stock premium formed by housing.
As a direct tax, the real estate tax is obviously an optimization mechanism to adjust income distribution and property allocation, which can reduce the negative impact of polarization on society. The reasonable situation under the regulation of real estate tax in the link of retention should be: Those who get rich first, live in luxury houses, and have more than one suite of housing should make more contributions to public financial revenue appropriately, which is in line with the principle of affordability and will not hurt them. After adding such financial resources to the public financial revenue, while better optimizing the tax system, it can better help the relatively vulnerable members of society to share the fruits of reform and opening up and improve their sense of happiness.
Positive effect 4: increase the proportion of direct tax and reduce tax pain
In China, the "tax pain" of low-income groups is related to the low proportion of direct taxes. More and more people have mentioned the contradiction between the low proportion of direct tax and the high proportion of indirect tax in the tax system, which has been reflected in the mentality of the middle-income class, the people "holding up the bowl to eat meat, putting down the chopsticks to curse the mother" and the pressure on government governance in real life. In the early days, the taxpayer awareness of citizens has not yet risen to a certain level, so most of them are unaware of the tax burden.
However, in recent years, the public's awareness of taxpayers has improved significantly. For example, when hearing that there are taxes in steamed buns and mooncakes, the public has a lot of complaints. In fact, indirect taxes are almost everywhere in consumer goods. The Ministry of Finance and the State Administration of Taxation have repeatedly demonstrated with a large amount of data that China's domestic macro tax burden is by no means exorbitant. At present, China's macro tax burden is generally the average level of developing countries, significantly lower than that of developed countries.
However, this cannot deny the painful tax problem that our people feel. The main source of this pain is actually indirect taxes. Indirect tax becomes the main part of the national treasury income, which means that the consumer is the main contributor to the national treasury income, and the main component of the consumer in China is the low and middle income class. The transfer and fate of these tax burdens involve very complex economic analysis, and it is difficult to accurately calculate the tax burden evolution of a specific consumer product at different stages. But in general, each consumer product contains more or less tax.
The main body contributing to the national treasury, the low and middle income class among the consumer masses, has transferred their material interests under the condition that the Engel coefficient is still very high (most of the income is used to meet basic living needs). This is a transfer of means of subsistence and a transfer of high degree of pain, so the problem of tax pain is actually unavoidable. Under the tax system framework dominated by indirect taxes, the group that makes major contributions to the national treasury is the consumer masses in China, and most of them are low-income and middle-income groups.
As mentioned above, China's macro tax burden is generally the average level of developing countries, which is significantly lower than that of developed countries. However, this does not negate the tax pain that Chinese people feel. The main reason is that the proportion of indirect taxes is high and the proportion of direct taxes is low. As an important direct tax, the retention link real estate tax will increase the proportion of direct tax in the whole tax revenue. If the macro tax burden remains unchanged, it can reduce the proportion of indirect tax, reduce the overall tax pain of social members, and promote social harmony.
In addition, relevant studies at home and abroad have long shown that the choice of taxing land and property causes less distortion to the market mechanism than other taxes. In addition to maintaining the stability of tax revenue, it is more conducive to the long-term development of the market economy.
The fifth positive effect: promoting the system construction of democratic and legal financial management
In particular, it should be pointed out that, as a source of funds suitable for local low-end tax to grasp and provide public services to the public, this tax system has a catalytic effect on the construction of democratic financial management and legal financial management system that deserves great attention.
Take a look at the United States: the main tax revenue of the local government is the property tax in the direct tax, also known as the real estate tax. New York City, with a population of more than 10 million, and an autonomous town with a population of as few as several thousand, are all local grassroots level governments in the United States called the local level. In this level of government revenue, property tax (real estate tax) can be as high as 80% or even 90%, and as low as less than 40%.
If our country is close to the experience of Americans in the future, we will certainly learn from the practice of Americans in the middle of the operation of the tax system - the transparency is very high, and the social members in the local government jurisdiction, You can participate in the discussion: how much property tax should be collected in this jurisdiction in a year (usually after other incomes are calculated clearly in the budget procedure, a gap relative to expenditure is seen, and then the local property tax rate of this year is calculated according to the requirements of filling this gap) and how to use the money after collection.
Everyone can participate in the discussion. Once the tax rate is determined in the budget procedure, the tax payer will pay the tax according to law. The response is a very clear notice from the government tax authorities to each taxpayer family: thank you for your contribution to the local property tax this year, how much of it is used for education, how much is used for greening, how much is used for our road construction, and so on.
This is a good mechanism under the legal framework of public participation, democratic supervision and tax administration according to law. Obviously, this kind of modern institutional arrangement cultivated in the future tax construction and development of "statutory taxation" and "democratic financing" will be incorporated into the historical trend of national modernization.
Related disputes and my opinions
In addition to the above positive effects, there are many controversial issues related to this tax. Some discussants said that the house I bought already includes the land transfer fees paid in front. Why should I repeatedly levy this tax? In fact, the land transfer fee is a kind of land rent. The nature of rent and tax is different, and they go their own ways. There is no relationship between "one can only take the other", which is the case in all countries.
It was also emphasized that: It is reasonable for other countries to levy land, but our country cannot pass the law, because others have private ownership of land, while our country has state-owned land!
In fact, this statement is also untenable: private ownership of urban and rural land does exist abroad, but there is also state-owned land ownership. For example, in Britain, the ultimate ownership of land is both public and private. The land ownership of all houses can be classified into two types: one is that there is a clear private property right of real estate directly; The other is to sign a contract, such as obtaining the right to use public land, and then building residential houses on it. No matter which of the two types, the real estate tax is fully covered.
In addition, we can also look at our own reform experience: in the early 1980s, we introduced the state-owned enterprise income tax through the two-step interest tax reform. Logically, some people say that even enterprises themselves are national, and what income tax does the state levy? But the truth at that time was also clear: beside the national ultimate ownership, the reality is that the management right is separated from it. Specifically, state-owned enterprises are commodity producers and operators with relatively independent material interests, They need to enter a fair competition state through tax adjustment, so all enterprises, including state-owned enterprises, need to pay the statutory corporate income tax.
This logic is also applicable to our current understanding of the real estate regulation mechanism on state-owned land. The land in the urban built-up areas in China is state-owned, but the subjects who obtain the land use right and hold their own houses have their own relatively independent material interests. If it is necessary to adjust the relevant interests, we can establish the real estate tax through the legislative process to adjust. Of course, after the expiration of the "70 year" land use right, the usufruct of housing should generally be "extended" according to the Property Law, so it should not be a matter of recovering the land or collecting another round of land transfer fees.
Others raised the complexity and difficulty of the real estate tax base assessment In fact, the "property tax simulation idling" launched more than ten years ago is to solve the technical problems in this regard. In the ten pilot cities, all the real estate rights should be confirmed, a full set of basic data should be obtained, all the data should be input into the computer, and the tax base assessment program software should be designed. Specifically, the manufacturing real estate, commercial real estate and residential property should be distinguished, and then an instruction should be given to automatically give an assessment result.
Such assessment results should be met with the parties, and in case of disputes, they can be determined through arbitration. To do these things, we must pay management costs at the beginning, but there are no hard obstacles that can not be overcome. It has been made clear that the national real estate registration system will be implemented on March 1, 2015, and by 2018, all the data and information of cities, towns and oceans will be available. Once these things enter the orbit, it is a problem of routine operation.
In addition, there is also a concern: will the collection of real estate tax from scratch lead to fierce tax resistance? It can be observed from the local experience of Chongqing pilot: Chongqing involved the housing stock in the real estate tax pilot, but there is a real estate tax levied on thousands of local independent villas according to the principle of "adjusting high-end". At the same time, a threshold of 180 square meters is designed in the plan, that is, after deduction of 180 square meters, the remaining area will be taxed.
In fact, the tax collection in Chongqing is quite smooth, because the rich do not care about this tax for a year, and they also deduct 180 square meters. Chongqing's enlightenment is that in the future, China will legislate to levy real estate tax, and the "first unit" should be deducted, so that the rich will also have a basic "tax-free housing security".
In a word, in a quite long historical period, we still have many problems in the face of direct tax reform, but if we encounter problems, we will retreat and give up the reform, and the contradictions will accumulate and hinder the overall modernization. At this stage, it is really an inevitable choice to establish a real estate registration system and speed up the legislation to levy real estate tax. That is, there must be a solution to the "overcoming difficulties" that has dragged on for so many years.
(Originally published in Shanghai Securities News)
(The author of this article introduces: Director of the Institute of Financial Science, Ministry of Finance, researcher, doctoral supervisor.)
