Article/Jia Kang, columnist of Sina Financial Opinion Leader (WeChat official account kopleader)
The Ministry of Finance recently announced the fiscal revenue and expenditure in July 2018, and disclosed that the accumulated personal income tax revenue from January to July was 922.5 billion yuan, up 20.6% year on year. According to media reports, this figure has exceeded the individual income tax of 2015. This gives many people a feeling that they are talking about tax cuts. How can individual income tax grow so fast? The trial analysis is as follows.
The Ministry of Finance recently announced the fiscal revenue and expenditure in July 2018, and disclosed that the accumulated personal income tax revenue from January to July was 922.5 billion yuan, up 20.6% year on year. According to media reports, this figure has exceeded the individual income tax of 2015. This gives many people a feeling that they are talking about tax cuts. How can individual income tax grow so fast? The trial analysis is as follows.
First of all, China's tax cuts in the previous period did not involve individual income tax. Including the replacement of business tax with VAT and various tax reduction measures related to corporate income tax, most of them are tax reduction arrangements for industries, enterprises, especially small and medium-sized enterprises, and R&D activities. In terms of individual income tax, there is neither tax reduction nor tax increase. The increase of threshold and the increase of deduction items have just ended public consultation. It will be some time before the implementation of the law amendment.
The reason why the data released by the Ministry of Finance showed a big increase in individual income tax this time can only be attributed to the growth of residents' income, especially for the employees of enterprises and institutions whose income level is above the threshold, who were affected by the salary increase brought about by the previous round of rising profit levels of state-owned enterprises and many private enterprises, and the growth of market institutions' income, The individual income tax paid has increased significantly.
In recent years, China has promoted supply side structural reform and optimized the industrial structure, gradually changing from seeking a soft landing, understanding and adapting to the new normal, to more actively leading the new normal, making GDP grow at a medium to high speed of 6.7% - 6.9% for 12 consecutive quarters, and bringing about more improvements in corporate profitability. With this foundation, more individual income tax will be paid.
Some people say that with the rapid growth of individual income tax, there is no sense of gain or happiness. In fact, from the perspective of "fundamentals", we can get different conclusions. As the name implies, income tax is the tax collected from the amount of income. Only when income increases can we pay more taxes. It cannot be said that if tax revenue increases, there will be no sense of gain.
Another thing that affects people's perception is that GDP data is the constant price without price factors, while tax is the current price without price factors. Therefore, if we compare tax growth and GDP growth with the same caliber, we need to deduct the points of price increases accordingly, so that the gap between the two will not be as big as the intuitive perception.
In fact, there is another content in the report of the Ministry of Finance that deserves attention: non tax revenue was 1408.2 billion yuan, down 13.4% year on year. This is a positive trend. In China's non tax revenue, a very important item is the administrative charge, which is relatively low standardized, but generally has red headed documents as the basis. While reducing taxes, we also need to make great efforts to reduce non tax revenues, including administrative fees, because this is in line with the will and requirements of deepening reform and supporting enterprises to invigorate and do a good job. Not long ago, an enterprise once reported that it had paid more than 500 fees. Although it was reduced to more than 300 after the verification of the relevant superior departments, it was still a long list, reflecting a heavy burden. At present, all the official taxes in China add up to only 18 types, and one enterprise will not encounter all of them. Therefore, while continuing to reduce taxes for enterprises, reducing various non tax revenues is a necessary item of the general trend, which should be continued with the help of supporting reforms.
Finally, the author would like to say that China's individual income tax grew at a double-digit rate from January to July, which mainly reflects the positive quality of national economic growth and the steady increase of residents' income. Of course, it also shows the space and necessity to appropriately reduce the tax burden of low and middle end taxpayers of individual income tax in the next stage. Whether the personal tax burden is increasing as fast as the figures show, taxpayers should still be based on their own personal feelings and specific calculations, and should not compare some simple global figures directly on themselves. If it is calculated that the individual income tax paid by you has increased in this period, your total income and the net income finally put into the bag must have increased more.
(The author of this article introduces: member of the National Committee of the Chinese People's Political Consultative Conference and researcher of the Chinese Academy of Financial Sciences.)
