During China`s “two sessions” in 2018, Chongyang Institute for Financial Studies at Renmin University of China (RDCY) launches a series of seminars, inviting famous professors from Renmin University of China (RUC) to interpret hot topics. On the evening of March 21, the fifth lecture was given by Professor Guo Qingwang, former dean of School of Finance at RUC, interpreting the top priorities of the fiscal and taxation reform in the new era.
Professor Guo said in the lecture that in the course of 40 years of reform and opening up, China has made remarkable achievements, in which the reform and policy design of fiscal and taxation systems plays an important role, Guo Qingwang said.
Professor Guo noted that the fiscal and taxation reform has gone through three historical stages. From 1978 to 1992, it was called the "planned commodity economy period", which mainly features the reform of the rural and urban economic system, and opened the door of China`s reform and opening up.
Since 1993, China has started the stage of the socialist market economy. The reform of the fiscal and taxation system is mainly to simplify the taxation system. The reforms in the previous two phases were very clear and targeted,Guo said.
To meet the demands of the new era, the 19th CPC National Congress proposed to build a "modern fiscal system." Guo said that the modern financial system will have two supporting foundations, one is hard power and the other is soft power. Hard power means an overwhelming abundance of material wealth, and we need to enlarge our GDP cakes continuously. In terms of soft power, it means the development of democracy, the rule of law, fairness, justice, security, and the environment to meet people`s requirements.
Professor Guo believes that a perfected fiscal and taxation system contributes to realizing the goals of the soft foundation, and the realization of the goals also contributes to the modernization of the fiscal and taxation system. They are complementary to each other.
The modern fiscal and taxation system covers many aspects. Professor Guo focuses on the modern tax system and the modern budget system.
Professor Guo said that the modern tax system has at least three major characteristics: First, the total revenue is dominated by tax revenue, and social security contributions (also called social security taxes in many countries) are supplemented. Second, direct taxes are the main source of taxation, supplemented by indirect taxes. Third, the status of personal income tax is very prominent in the direct tax system.
As for the budget system, Professor Guo pointed out that budget transparency should be improved and the tax expenditure budgets should fully reflected the financial input. He said that China`s five-year plan is conducive to matching the budget to the entire national economic development plan and increase the scientificity of the budget, which will make it more in line with the requirements of the country’s economic and social planning.