On The Four Principles Of Taxation

The principle of taxation is a basic theoretical issue in taxation, and it is also a frequently debated issue.

There are great differences in understanding and elaboration of tax principles between different periods and scholars.

We believe that taxation itself is a historical and developmental concept. People's understanding of tax phenomena and essence also has a continuous improvement process.

Therefore, as a reflection of people's cognition of Taxation, the principle of taxation is also developing constantly. We should look at the principle of Taxation from the perspective of development.

The principle of taxation is the basic principles that should be followed by government taxation, including the establishment of tax system and the use of tax policies.

So what principles do governments need to follow in terms of Taxation?

From the history of tax revenue development, although people have different views on the principle of tax revenue at any time, in general, with the development of the economy, the expansion of government functions and the improvement of people's awareness, the principle of Taxation has undergone a process of continuous development and continuous improvement, and this process will continue.

The idea of tax principle can be traced back to a long time ago.

For example, in the pre Qin period of China, the idea of average tax burden had been put forward, and the land classification level was taxed separately. In the spring and Autumn period, Guan Zhong, a politician, put forward the tax principle of "phase and decline", and determined the weight of the tax according to the fertility of the land.

In the mercantilism period of 16 and seventeenth Century, the West put forward a relatively clear tax principle, such as William, an English economist in the late mercantilism.

Petty first proposed the principle of "fairness, convenience and economy".

But it is generally believed that the first systematic and clearly defined tax principle is Adam.

Smith's "four principles of Taxation", that is, "fair, definite, convenient and economical" principle.

Since then, the content of the tax principle has been continuously supplemented and developed, and the most influential one is Adolf.

Wagner put forward the "four sides of the nine principles of Taxation", that is, the financial principles, including the principle of full and flexible, and the principles of national economy, including the selection principles of tax sources and the choice of tax categories; the principles of social justice, including the principles of universal and equity, and the principles of tax administration, including the principles of truth, convenience and minimum levying, that is, the principle of saving.

In modern western finance, the principle of taxation is usually summed up as the three principles of "fairness, efficiency and stability".

In fact, there are many kinds of taxation principles, but the above three kinds of influence are the most important.

These three theories of tax principles not only represent and reflect people's understanding of tax revenue in three different periods, but also basically show the pulse of the development and perfection of the theory of tax principles.

According to the contents of the above tax principles, combined with the development of tax theory and practice, we sum up the four principles of "fairness, efficiency, moderation and rule of law" from the four aspects of society, economy, finance and management.

The principle of fairness in taxation is the principle of fairness in taxation, that is, government taxation, including the establishment of tax system and the use of tax policies. We should ensure fairness and abide by the principle of fairness.

Fairness is the basic principle of taxation.

In the history of our country, there are many discussions that emphasize tax fairness.

In modern society, the principle of tax equity is one of the goals pursued by governments in improving tax systems.

But how can taxation be fair? In different periods, standards are often different and understanding is different.

From the perspective of historical development, tax equity has undergone a process from absolute equity to relative equity, from social equity to economic equity.

Tax fairness is the first thing to be taken seriously as a matter of social fairness.

Social justice has always been one of the important factors that affect the stability of the regime.

Revenue is originally the government's free distribution to taxpayers, although there are various reasons for taxation, but from the perspective of interests, taxation is after all the direct reduction of taxpayers' interests. Therefore, in the process of Taxation, there are objectively opposite interests and conflicts, and taxpayers are naturally concerned about whether the levy is fair and reasonable.

If the government tax is unfair, the resistance to taxation will be great, and tax evasion will also increase, which will cause social contradictions and even regime change.

The social justice of tax revenue is the absolute fairness of tax amount, which means that every taxpayer should pay the same amount of tax.

The reflection of tax practice is the prevalence of fixed tax and poll tax.

Wagner developed the standard of fairness from absolute fairness to relative equity. That is to say, taxation should take into account the taxpayer's ability to pay taxes, and should pay more taxes if the tax capacity is high.

It calls for progressive tax rates in the tax system.

Nowadays, in theory, relative equity is divided into "horizontal equity" and "vertical equity".

The so-called horizontal equity, simply speaking, is that those who have the same tax paying capacity should bear the same tax; while vertical equity is the tax burden of different tax burden, the tax burden should not be the same, the stronger the tax capacity, the heavier the tax burden it should bear.

Then, how can we judge the tax capacity?

It is usually judged by the amount of wealth owned by the taxpayer, the level of income or the size of the actual payment.

(Note: the ability to pay tax as a fair standard is theoretically called "competence theory".

How to judge tax capacity is theoretically divided into "objective" and "subjective".

According to the objective theory, the tax capacity should be determined according to the objective indicators such as the wealth owned by the taxpayer, the earned income or the actual payment capacity.

Subjectivism emphasizes that taxpayers' sacrifice or utility reduction due to tax utility should be the same, or the marginal utility after tax is the same.

In addition to the "ability theory", there is also a "benefit theory", that is, to measure the fairness of the government's public services.

According to this standard, the taxpayers who enjoy the same interests from the government public service mean that they have the same level of welfare. Therefore, they should bear the same tax to reflect the horizontal equity. The taxpayers who enjoy more interests have higher welfare level, so they should bear higher taxes to achieve vertical equity.

In reality, the tax and social security of the highway are often reflected, but in many cases the benefit level is not well measured.

In the real tax system, property tax is levied according to the income of property and income tax. Tax exemption for low income people and allowances for family support are all reflected in this view of fairness.

In Western taxation, fairness usually refers to social equity, that is, the principle of social justice.

In reality, government taxation should not only follow the requirements of social equity, but also achieve economic fairness.

That is to say, in modern economy, the principle of Taxation actually includes not only social equity, but also economic equity.

The economic fairness of taxation consists of two levels: first, the tax should be kept neutral, that is, all taxpayers engaged in business, including operators and investors, should be treated equally and equally, so as to create a reasonable tax environment for operators and promote fair competition among operators.

The prevalence of VAT and the rate of corporate tax are mainly reflected in the proportional tax rate.

Secondly, there are unfair factors, such as resource endowments differences, which need to be regulated through differential taxation to create a generally equal or generally fair and objective competitive environment.

These two levels are also equivalent to horizontal equity and vertical equity in social equity.

Tax fairness, especially economic fairness, has important guiding significance for the construction and improvement of tax system in the process of China's pition to the market economy system.

On the one hand, through the 20 years of reform and opening up in China, people's living and income levels have been greatly improved. The income distribution mechanism has largely broken the "equalitarianism" distribution (the average distribution is not equitable distribution), and the income class has been properly opened. But at the same time, a certain degree of "disparity between the rich and the poor" has begun to appear. Therefore, how to use tax means to regulate income distribution and achieve fair distribution of income has become one of the important functions of taxation.

On the other hand, because the market development of our country is quite imperfect, there are many external factors for unfair competition. At the same time, the tax system that meets the requirements of market economy development needs further improvement. Therefore, how to make the tax system more fair and create a fair and reasonable tax environment for the development of market economy is an important research topic of further tax reform in China.

Two principles of efficiency, the principle of tax efficiency, that is, government taxation, including the establishment of tax system, the use of tax policies and the whole tax administration, should be based on efficiency and efficiency.

Taxation should be not only fair but also efficient.

The efficiency here usually has two meanings: first, administrative efficiency, that is, the efficiency of Taxation process itself, which requires the minimum cost of Taxation in the process of collection and payment; two, economic efficiency, that is, taxation should be conducive to promoting economic efficiency, or at least having the least adverse effect on economic efficiency.

The administrative efficiency of tax administration can be reflected by the ratio of tax cost, that is, the ratio of the administrative cost of tax to the tax revenue. The effective rate is to levy as much tax revenue as possible with the lowest possible tax administrative cost, that is, the lower the tax cost rate is, the better.

Obviously, the administrative cost of Taxation includes not only the collection cost of Taxation for the government, but also the cost of paying taxes for taxpayers, which is what the West calls "pursuing cost".

Adam.

The principle of "convenience and saving" produced by Smith and Wagner is essentially the principle of administrative efficiency of taxation.

The principle of convenience emphasizes that tax system should enable taxpayers to pay taxes conveniently, including the time, method and procedure of tax payment.

This will undoubtedly help to save the cost of payment and meet the administrative efficiency requirements of taxation.

The principle of saving is Adam.

The principle of "minimum cost of collection", which Smith and Wagner call, emphasizes that taxation should be as few as possible.

Adam.

Smith said very clearly that "all taxes must be collected to the extent that the nation can pay as much as the state can earn."

The so-called cost here is actually limited to the cost of government collection.

It should be pointed out that tax collection costs and payment costs are closely related, and sometimes even can be converted to each other.

The introduction of a tax policy can help reduce the cost of collection, but it may be at the expense of increasing the taxpayer's cost of payment, or vice versa.

This shows that the administrative efficiency of taxation must have a comprehensive consideration of the cost of collection and the cost of payment.

In reality, how to improve the administrative efficiency of taxation is an important goal to be solved by tax collection and administration.

The economic efficiency of taxation is the higher level of tax efficiency principle.

The economy decides taxes, and taxes react on the economy.

Tax allocation inevitably affects the operation of the economy and the allocation of resources, which is an inevitable objective law.

However, the impact of Taxation on the economy is positive or negative, and the extent and scope of the impact are controversial. There is also a continuous development process in cognition.

Reflecting the economic efficiency of Taxation, there are different levels of understanding.

First, it requires the minimum additional burden of taxation.

The so-called additional burden of taxation is simply a drop in the efficiency of resource allocation caused by taxation. It is an economic loss other than tax administrative costs, that is, "additional burden". Therefore, compared with the administrative cost of Taxation, it is usually called the economic cost of taxation.

Therefore, the government should choose a reasonable way of Taxation so as to minimize the additional burden of taxation.

Then, what kind of tax mode distorts the economy?

It is generally believed that tax neutrality should be maintained.

The second level of tax revenue and economic efficiency is to maintain tax revenue.

Taxation plays an active role in promoting economic development. The government should try to avoid the adverse effects of Taxation on the economy and give full play to the role of Taxation in promoting the economy.

Wagner put forward the principle of national economy of Taxation, including the selection principle of tax source and the choice principle of tax categories.

In order to protect and develop the national economy and make the tax revenue gain advantages and avoid disadvantages, the government should carefully select the source of taxation.

In principle, the source of taxation should come from national income rather than tax.

Tax is the source of taxation.

It is generally believed that national production is a tax and national income is a tax source. In principle, taxation can only participate in the distribution of national income, but not national production.

This is like picking fruit on trees, fruit is the source, trees are the roots, we can only pick fruit, not hurt the tree.

The third level of tax economic efficiency is also the highest level. It requires the allocation of resources to improve the efficiency of resource allocation.

This is based on a positive understanding of the role of tax regulation.

Tax is not only a passive role in the economy.

Because of the market failure in reality, it is necessary for the government to intervene, and tax distribution is the result of government intervention.