A Study On The Problem Of Taxing Costs And Its Control In China

Recently, tax revenue has been increasing with high speed. However, the costs andexpenditure have also been increasing and the increasing speed of taxing costs overtookthat of the tax revenue. It has been a very important phenomenon during these years. Thisphenomenon can not only affect pure tax revenue, but also lead to false governmentinformation, wrong government economic policy, and damages to the authority of the taxlaw and the operation effect. Therefore, taxing costs control has been the key to furtherdeepen tax reform, to improve tax environment and to improve tax administration level.This study made a systematic and deep research on the problem of taxing costs at presentand the reason for high tax cost from the prospective of institutional arrangement andinformation asymmetry. It also made analysis of the reasons for high costing and it alsoput forward the guideline and policy suggestions.First this study made a generalization of the literature review. It is found thatcurrently the research on the taxing costs control is very weak both in depth and width, thediscussion of the problem is scattered and simple and it is still on the level of practicaloperation and it is far from systematic. Especially in China, the study on this topic beganat a very late time and most of them are usually the summit of the tax practical work. Andthe relative control measures are neither practical nor specific. It proved that serious gapstill existed between theoretical research and practice in financ(?) and tax in China. Becauseof the reasons mentioned above, the study on the taxing costs control was conducted inaccordance with the author's years of experience in tax practical work, combined with thetheories and methodology of economics to make up the shortage of the research in thisfield.By searching a lot of literature and data and the practical data investigated in person,the author made a longitudinal and horizontal international comparison and found thattaxing costs are high and difference exists between regions; taxing costs in local taxauthority are higher than taxing costs in national tax authority; cost in paying tax is alsorelatively high; difference also exists between different tax categories and differenttaxpayers in paying tax cost; and cost is neither easy to measure nor easy to be controlled.On the basis mentioned above, this study proposed the theoretical framework foranalyzing the problem of the taxing costs by applying relative theories of the institutional economics and information economics. It analyzed the reasons for high taxing costs fromthe aspects of the formal restrictions, informal restrictions and implementation system. Itpointed out that the basic reasons for high taxing cost are as follows: the legislation is notperfect, the existing tax system is unsteady, complicated, unreasonable, and impractical,the informal restriction factor is not suitable to the tax system change and the taxadministration system has too many limitations.Following that, this study made an analysis on the effect analysis of the high taxingcosts. High taxing costs not only lower the tax revenue (gap is quite large compared toforeign countries) and reduce the national financial revenue scale, but also weakenmacro-economic adjustment, furthermore, they affect financial disposal order, reducesocial employment, damage the balance the proportion of investment to consumption, andreduce the efficiency of tax administration efficiency and production efficiency.Under this precondition, the study made an analysis of the major impacting factorswhich are tax system, tax environment and tax administrations by the methodology of thecomparison. Through the horizontal international comparison of the factors between Chinaand developed countries and developing countries, successful experience from foreigncountries was exposed and effective guidance and relative measures to reform tax system,to improve tax environment and to improve tax administration are proposed on the basisabove mentioned. The author believed that following measures should be taken todecrease taxing costs: first, intensify the role of the formal restrictions. On one hand,strengthen tax legislation by strictly limiting the entrusted legislation power of the taxlaws, improving the effect level and the stability of the tax law, dividing taxing power in amore reasonable way, designing tax system in a more reasonable way, improving thesingle tax law efficiency and playing the scale effect of tax law system. Second, play therole of the utility of the informal restrictions by strengthening the publicity work of taxlaw, by improving cost consciousness of the tax authorities and the tax officials, byimproving the professional service level of tax agency, by developing and normalizing thetax agencies and by strengthening taxpayer's rights.etc,. Third, intensify the effectivenessof the implementation mechanism and improve the effectiveness of the tax administrationsystem by improving the tax administration system, by intensifying the supervision andcontrol of the tax sources, by carrying out the system of the tax declaration withdifferences, by intensifying tax examinations, by intensifying the tax informationconstructions and by ultimating the resource relocation of the tax administration source. Fourth, decrease the situation of the information asymmetry by improving the system ofthe information exposure, by improving the information exchange system, by taking fulluse of the information resources, by establishing tax reporting system, by improving thestimulation mechanism and restriction mechanism to the tax authorities and byintensifying the stimulation mechanism and the restriction mechanism to the taxpayers.