Analysis Of Reform Paths For Banking Tax System In China

Banking is the key to the development of the whole national economic in the modern financial system, and the main tax source of the fiscal revenue. The economic behavior and the profits need the restraint of tax system, and system reform and the development of banking need the adjustment by tax system. To the banks, the tax burden is the result of tax system. However, the standard to determine whether the tax system of banks is reasonable or not, and whether is conducive to the development of banking, is not the level of tax burden, but the rationality of the tax burden. The tax policy of banking in our country experiences several adjustments. The tax burden has stabilized, and the market competition of enterprises increases gradually, but there are still some unreasonable factors exist in the active tax system, which shows the coordination problems between the tax burden and the present condition of the market competition of the industry. In fact, China’s financial market competition is not sufficient enough. The particularity of China’s banking makes the active tax system cannot balance the tax burden of enterprises well, and promote the fair competition in the industry. We suggest that the next step of tax reform scheme should consider the reasonability of tax burden under the premise of easy operation. Therefore, by means of combining normative analysis and empirical research, according to the current situation of the tax system in china’s banking, the development of banking system is analyzed, and through the tests of a large amount of data, referring to the comparison between the tax index and margin index of banking in the industries, tax burden level of banking in our country is rationally discussed, and analysis of the key problem in the tax system of the banking is carried out. In addition, drawing lessons from advanced experience of foreign countries, a concrete tax reform scheme is designed and the changes of tax burden are calculated, and a tax system optimization strategy fit to the situation of our country is put forward. It is expected to improve the management level of banking, risk resistance ability, social service ability, and the ability of financial resources allocation on the premise of following the principle of fair efficiency.Firstly, the background and significance of the topic, literature reviews, the main research methods and the research content is elaborated. At present, China’s banking system is in a new round of reform. A tax system which is more reasonable will be conducive to the fair competition in the market. From the perspective of the research status of the industry, discussion about tax system of banking tends to analyze the impact on banking’s performance and competitiveness from the heavy tax burden in china’s banking, but discusses about the rationality of the tax system from the angle of tax justice is less, and the related data to calculate tax burden level and the policy to determine the efficacy of tax system are both not the latest. Therefore whether the tax burden is rational need statistics to judge, and how to choose the tax system needs a multidimensional measure combined industry characteristics and market situation.Secondly, after look back on the development of banking and tax system in China, summarizing the purpose and meaning of the previous tax reform, the practice basis to explain the rationality of the tax burden in the following is provided."The reform of tax sharing system" in1994, set up a tax system in which business tax and income tax is the main tax items."The merger of the two taxes" in2008, is an important turn point in the tax system reform. The new income tax of enterprises largely solved the problem of china’s heavy commercial bank tax burden. The pilot project "to replace the business tax with a value-added tax(VAT)" in2012, pointed out the direction of the tax system reform in financial insurance. Whether the plan can fully implement the rationality of tax burden needs a further discussion.And then, using the effective indicators of the real tax burden, based on the principle of tax fairness, referring to the latest statistics, the comprehensive tax burden of China’s banking is detected. According to the relationship between tax burden of banking and the profits, in the angle of industry contrast, the active tax system in China’s banking industry does not play a good role in keeping fairness of the tax burden. Seeing from the whole industry, the profits scale and level of China’s banking is too high. But from the banking industry alone, China’s listed banks, especially large state-owned commercial banks, hold the absolute status and resource superiority without apparent competitive products and services, and the profits are not derived from the market with fully fair competition.After that, tax system of the banking in the foreign countries is mainly introduced and analyzed. According to the reality of banking in our country, the experience that can be used for China’s banking reform is summed up. First of all, most developed countries use the single tax system structure in which the income tax is the main taxation. Countries still levy business tax on banking are rarely and set up a relatively reasonable tax base and tax rates. Second, income tax policy in the foreign countries generally made with interval tax rate. In general, they take the problem of tax burden fairness into account clearly. This structure is more conducive to create a financial market with fair competition, promote the commercial banks operating efficiency, and great help to the development of growing market competitiveness of accumulation of capital and financial innovation.In addition, guided by the basic theory of tax, combined the status of the tax system and tax burden, three sets of policy scheme for tax reform of China’s banking is designed, and the changes of tax burden of banks about different scheme and the tax rate for tax equalization are calculated. Two kinds of schemes are protocolled first, and one is to levy the VAT at once on banking revenues, and the other is a type of modern tax system that distinguishes banking business. But they will both result in huge changes on tax burden and fiscal income. These methods are familiar with the active business tax system. Such a tax form cannot solve the problem of industry tax injustice. So the third scheme is designed as a more suitable one, so it can levy the income tax of enterprises directly in accordance with the sum of bank’s original total profit and business tax.Finally, the analysis of the foregoing chapters is summarized, using the design experience from the foreign banking system and combining with the empirical research results of China’s banking, the optimal path of the banking tax reform is determined to gradually establish a simple tax system structure which is dominated by income tax system. In the short term, according to the requirements of stable tax burden and easy operation, and the experience "to replace the business tax with a VAT", the pilot work can proceeded in the area with conditions, and then the reform will proceed to all parts of the country. It is prophetic to consider transit gradually from the double main body structure of turnover tax and income tax to the simple tax structure of income tax only. Meanwhile, on the basis of a much more fair competition in banking, some multi-interval tax rate should be designed by the size of the capital scale of banks or the profits. And the income tax can exert the function of automatic adjustment, and manifest the request of tax justice.The innovation of this paper is that:firstly, in the theoretical part, the path of the tax system reform in China’s banking is explored based on the reasonable tax burden. Guided by the principle of tax fairness, whether the tax system of banks is reasonable is judged by the reasonability of its tax burden. The new tax policy should balance the tax burden of enterprises, and promote the fairness of competition in the industry. Secondly, in the empirical part, the tax reform scheme "to replace the business tax with a VAT" in the most mainstream banking (financial insurance industry) is examined. The scheme is worse than the simple tax structure which is dominated by income tax in the long run. At the same time, on the basis of the much more fair competition in banking, some multi-interval tax rate should be designed by the size of the capital scale of banks or the profits. And the income tax should play the function of automatic adjustment, and manifest the request of tax justice.However, some deficiencies exist inevitably in this article. In the process of inspecting the real tax burden of banking, some part of the measured data is from the sample banks selected according to enterprise assets scale. The data is not come down to the whole industry. When discussing the changes of tax burden in the modern VAT system, in order to simplify the calculation process we assume that all the business of banks can obtain the special invoices for VAT, and the input tax of VAT is ignored.