Study On Stamp Tax Of China

It has been 10 decades since China imposed stamp tax in 1909. Currently, the function and role of stamp tax, which is highly recognized inland and abroad as good tax, is fairly unsatisfied. Since 21^st century, the fact that tax revenue rises with the annual rate of 20% which exceeds the growth rate of GDP has attracted profound consideration on current tax system from relevant stakeholders, and this becomes the motive of tax system reform. In early 2008, the State Administration of Taxation proposed the guideline to focus on local tax system reform and build a more scientific and rational local tax system. However, the current global financial crisis made tax revenue fall from month to month. The following issues, such as perfecting tax system, improving administration and exploring tax sources are becoming imperative. As one of the main taxes, stamp tax cannot remain indifferent. Meanwhile, as a carrier and physical manifestation of tax culture, tax stamp should be dedicative under the background that establishment of tax culture is advocated vigorously and public craze for collecting revenue tax stamps keep rising.Stamp tax was founded by democratic discussion so it is a good model to the development of democratic wave of tax, the establishment of a harmonious tax system and the design of tax category creation mechanism. On the occasion that stamp tax has been imposed for 100 years, it is a very practical subject to sum up the past, review the present, look forward to the future and study how to make it function effectively. However, the theoretical and empirical research on stamp tax is still quite rare in China. In this Article, I carried out systematic analysis and study on basic theory, generation, evolution, current status and future development trend of stamp tax. I hope this study can help us get clear understanding of the historical facts, find the law, and guide the practice.The theory of Chinese stamp tax study originated from the discussion and disputes on proposing levy of stamp tax (on trial) in late Qing Dynasty. The relevant propositions can be summarized as one principle, one concept and one approach. The general principle of the levy is composed of four sub-principles, i.e. keeping tax right independent, utilization of international experience, adapting to State affairs and appropriate delegation of authority. The basic concept of tax system design is also divided into four categories, which is simplifying tax system, establishing a light tax burden but heavy penalty system, maintaining overall tax burden, and imposing on property transfer and commercial vouchers. The basic approach is as follows, State keeping control of stamps, popularization the tax after trial, implementing fix tax rate before graduating rates, inspecting strictly step by step, advocating the awareness of public sticking stamps. Collection of stamp tax not only has six benefits to make people fulfill promises. It also has eight advantages for curbing abuses of tax administration at that time and ten conveniences as well for both taxpayers and collectors. Stamp tax has eight functions such as ancillary notarization, supervision of social good faith. It also has. eighteen kinds of nature, such as being the tax of notarization, tax of culture and democracy. The nature of being notarization tax is the unique charm of stamp tax which is the secret for succeeding in its expansion. Tax stamps have eight functions such as name card of tax, the carrier of tax culture and tax promotion. Through empirical analysis, we found that current stamp tax contributes quite little to the total amount and increased amount of tax revenue in China, and even less to local public finance. Normal stamp tax has minor function on adjusting and controlling economy and society due to low tax burden. However, stamp tax is still worthy of retaining in China.Through the study of the history of stamp tax, we found that Mr. Daae.I.M, a visiting minister of Qing Dynasty, is the first person who proposed introduction of stamp tax in China. Stamp tax is the first and the only tax levied on trial imitated from western countries. The first stamp tax system is the Stamp Tax Charter Pilot formulated in December 1902. China imposed stamp tax in 1909 for the first time. However, the first Red Revenue Stamp has been a major issue in the study of Chinese Philately in the past hundred years, leaving a number of disputes and arguments. As a matter of fact, the British version of draft sample printing of revenue stamp in late Qing Dynasty does exist. Black Proof of Red Revenue Stamp and Vrinted Draft of the Revenue Stamp with the White Line Lace Engraving is a kind of two plate proofs. Black Proof is likely to be the test module of post stamp proof sent by Mr. James Duncan Campbell on January 31, 1896 and received by Mr. Robert Hart on March 15.Through the research on the historical evolution of elements of stamp tax system, we found the objects of stamp tax in China include personnel certifications, special commodities, deeds of purchase, etc. Deed tax was paid by sticking special stamps, which showed the intention that deed tax merging with stamp tax. As to tax items, the highest and lowest record was 76 items and 9 respectively in history. As to tax rates, the utmost grades of grade fixed tax rate system were 7 and the highest rate of flat rate was 30%. The limit of attaching stamps to taxable voucher was set at 20 Yuan at one time. In late Qing Dynasty and early of the Republic of China, the parties may refuse or return taxable receipts failed to affix stamps and the court can ignore this kind of lawsuit unless the stamps were well attached and penalties were imposed. There were several methods of calculating penalties, one was in multiples of fine (up to 300 times that could be fined), and another was in the amount of penalty (up to 200 Yuan). Research on the collection and management of stamp tax during the Republican period showed that the Republic of China took many effective measures. For example, (i) focused on promotion and use of stamp tax during the early period of imposition; (ii) set up Propaganda Office in National Police Agency in Beijing and Ministry of Finance sent inspectors to preach; (iii) tax officers who had merits in colleting tax can be awarded medals and money; (iv) established supervision, inspection and selective examination system and put provincial capitals and cities which have plentiful tax resources as key objects of inspection; (v)Post offices took the responsibility of selling revenue stamps County magistrate was in charge of marketing revenue stamps; and (vi) established specific case tribunal prospectus. On the other hand, there were many mistakes and neglects. Such as, local governments often interpreted laws by means of administrative orders or reference thus caused expansion of taxation incidence; changed the tax rates and penalty standards quite frequently, sometimes the time frequency was only half a year according to the commodity prices fluctuation; took charging penalty as a means of accumulation wealth during the wartime; altered the methods of tax-calculation and projected stamp tax liability; sold revenue stamps at discount price beyond jurisdiction area thus damaged territorial jurisdiction. Each government of provinces and regions printed and sold revenue stamps under their own discretion. Revenue stamps were granted with public funds thus to offset the military and political expenditures and the stamps were contracted and apportioned by government orders sometimes. Internal staff printed revenue stamps privately and made mortgage loans with revenue stamps. The Governments of Qing Dynasty and the Republic of China only took stamp tax as a tool of accumulation wealth and ignored its function of ancillary notarization. They just charged heavy penalties but did not know to meet and utilize taxpayer's need of notarization. In addition, the public failed to trust the governments due to their corruption and incapability as well as their mistakes. All these factors inevitably turned stamp tax into an exorbitant tax which oppressed people from the good tax. At present, the objects of stamp tax in major countries (regions) in the world can be divided into three forms. However, most countries (regions) just levy stamp tax on economic vouchers, only a small number of countries (regions) put personnel certifications as the objects of taxation. The securities trading in Chinese mainland firstly has the voucher of transferring and the economic voucher is the object of stamp tax. Economic vouchers as objects of stamp tax can be divided into three categories. In Chinese mainland, stamp tax is levied selectively on vouchers related to production and operation activities. Stamp tax can be paid in three ways: sticking stamps by taxpayers themselves, affixing seals at the place of tax authority or other designated places, accumulating and filling in tax payment receipts. In Chinese mainland the third type, affixing seals is not carried out. The structure of stamp tax rate is divided into three categories, while in Chinese mainland stamp tax rate is single flat rate complemented by single specific rate. Both the nominal and real rate of stamp tax varies greatly among countries and regions, and both are quite low in Chinese mainland. Generally speaking, the role of collecting revenue of stamp tax in all countries (regions) is in line with the capacity of wealth enrichment, the stronger enrichment capacity the more powerful role in collection mass fortunes. Stamp tax's capacity and role in enrichment of treasury is quite low in Chinese mainland. The study result of panel data model shows that the stamp tax's enrichment capacity does not have high correlation with economic situation and economic structure, but it slightly positively correlates with the degree of commercial development and closely related to tax system structure. So the origin of force of increasing stamp tax revenue is to improve the structure of stamp tax system.The target of optimal collection rate of tax is to find the best combination of tax revenue and administration costs rather than pursuit of high percentage charge. There are constants in the field of tax administration. The constants are interval rather than some precise value, which are achieved by individual sample mean multiplied by the corresponding psychological coefficient of relevant management goal. Now the phenomena that constant problems are ignored and the rules are changed quite frequently in current tax administration have caused many adverse consequences. As to stamp tax, the foremost task in collection and management is to develop and complete the plan indicators which are specific and accurate. While many targets in administration are constant values, when we replace the constants with indicators in tax management, it not only easily lead to confrontation between tax collectors and taxpayers, but also prone to trigger changing rules, raise the cost of collection and tax payment and reduce the credibility of tax law. Therefore, management of constants should be studied and identified, in particular the core constant, the rate of tax loss or the tax levy rate. The realistic option to explore and achieve the optimal collection rate of stamp tax based on constant thinking is to establish a regional taxation administration pattern under the frame of four major development priority zones.In consideration of the collection revenue potential of stamp tax in China, the stamp tax should be cultivated as the main tax for local governments. In the short to medium term taxation authority should take the following measures, such as improve and perfect the existing items of stamp tax, impose tax on personnel certifications and incorporate deed tax into stamp tax. In the long run, some reforms should be made to perfect stamp tax, such as, impose stamp tax on economic transactions, revise and publish Stamp Tax Act to provide that taxable receipt related to lawsuit without sticking stamp tax should be ordered to affix appropriate stamps otherwise the court have the right not to accept it. Except that tax authority should also adjust the force of management and services based on tax resources and regional function localization, improve tax payment services, and add the tax payment method of affixing seal. There are quite many issues pertaining to the current tax stamps which blocked the full implementation of its functions and effects, for example, the theme of stamps is not closely to taxation purpose, the distribution channel is not developed, professional studies are not sufficient. We need to explore those unique themes related to tax culture, improve design of the drawings, make reasonable arrangement in relation to the face value and quantity of prints; build up publicity and promotion efforts, delegate postal office as sales agents of tax stamps; set up academic association for revenue stamps, conduct achievement exhibitions and seminars; collect and protect tax stamps with the assistance of national fiscal museum.The establishment of the following econometric model: or makes a quantitative description of the degree of the effect of adjustment of the rate of securities trading stamp tax on the turnover rate of securities market. In Chinese mainland, stamp tax on securities transactions have been adjusted quite frequently. In short term, tax revenue shows a basic trend in the same direction with tax rate, but from medium to long term, high tax rates do not necessarily bring about high tax revenue, low tax rates can also achieve the same high-income goal. Laffer Curve is verified by the related curve between tax rate and tax revenue. Since 1990s major financial powers started to reduce or abolish securities trading stamp tax, which has gradually become the mainstream in tax system reform in international financial market. But the mainstream is under the test of the sudden occurred global financial crisis. In China, the government should retain securities trading stamp tax and play its role in revenue collection and market adjustment at least in the medium term. Tax authority should assess the timing and force of reform thus. to improve the tax system in financial market.