Structure of burden still unbalanced, experts say
The nation's macro tax burden, which is measured by total government tax revenue to GDP, has been lower than the global average over the past two years, media reports said Tuesday.
On the basis of the IMF statistics standard, China's macro tax burden in 2014 and 2015 stood at 30.5 percent and 30.1 percent of GDP, respectively, lower than the world average level of 38.8 percent, domestic news portal www.chinanews.com reported Tuesday, citing official data.
The average macro tax burden in developed countries was nearly 42.8 percent in 2013 and the ratio in developing countries reached 34.4 percent in the same period, also higher than in China during the same period, said the report.
Experts said it's hard to judge the figures, as the tax burden in different countries is based on their own situations.
Even the tax burdens in countries at similar stages of economic development can differ substantially, said Zhang Bin, director of the National Academy of Economic Strategy under the Chinese Academy of Social Sciences (CASS).
"For example, the macro tax burden in some developed countries in North Europe varies from 40 to 50 percent, while the ratio in the US and Japan stands at around 30 percent," Zhang told the Global Times on Tuesday.
Although China's total tax burden is lower than the global average based on the IMF standard, the tax levied on Chinese enterprises is greater than in Western countries, especially the tax rate for State-owned enterprises (SOEs), Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology, told the Global Times Tuesday.
China National Petroleum Corp, the country's largest oil and gas producer, attributed the big oil price gap between China and the US to the fact that total taxes and dues account for 48 percent of the domestic refined oil price in China, media reports said on February 16.
"SOEs have made great contributions to the country's tax revenue thanks to the national conditions," Dong said.
"A tax burden imbalance exists in different industries, and traditional industries have a bigger burden," he said, noting that firms in less developed areas in China also face a higher tax burden.
Tax cuts needed
Given the complex macroeconomic environment in 2016, there should be tax cuts and a rise in spending simultaneously, according to a statement posted by the Ministry of Finance on February 18.
Tax reductions should be based on the need to improve the market environment by supporting the development of small and medium-sized enterprises and micro businesses, as well as lowering their financing costs and expanding financing channels, the statement said.
The country cut taxes by more than 300 billion yuan ($46.15 billion) in 2015 to boost mass entrepreneurship and innovation, the Xinhua News Agency reported in January.
Among this, tax breaks and exemptions for small firms amounted to 100 billion yuan and tax reductions designed to encourage high-tech development reached 140 billion yuan, Xinhua said, citing data from the State Administration of Taxation.
There is some room for China to expand its budget deficit in the short term, so tax cuts could be made imminently to help stabilize economic growth, noted Zhang from the CASS.
But Zhang said the main issue for China's tax burden lies in its structure rather than its scale.
"The current tax system is unfavorable in terms of distribution. More tax is levied on commodities and services in China while the tax on personal income is comparatively low compared with foreign countries," he said.
Zhang noted that the government should raise personal income tax while lowering the levy on commodities and services in the future.
