On The Enlightenment Of Russia's Individual Income Tax Reform To China

At the beginning of the 21 st century,Russia's individual income tax reform has achieved tremendous success.Taxpayers generally pay taxes at a single tax rate of13%.With higher individual income tax exemption,the reform has substantially increased the taxpayer's enthusiasm for taxation.Moreover,the single tax rate simplifies the taxation process and effectively curbs the incentives for power rent-seeking,tax evasion that have caused active gray economy in Russia,thus purifies the Russian taxation environment,greatly eases the country's fiscal deficit,raises fiscal revenue for the federal government,and promotes the economic development.At the same time,in order to better take into account the function of individual income tax in regulating income distribution,the federal government has established pre-tax deduction standards that suit Russia's national conditions on the basis of a “wide tax base”.Social and livelihood issues such as single economic development,demand for further improvement in the quality of the people,social pension difficulties and a drastic decline in the population after the Second World War have been considered by the federal government in formulating the pre-tax deduction standards.Guide by the principle of ability-to-pay taxation and emphasis on the fairness of taxation,the tax reform has truly reduced taxpayers' tax burdens and improved tax compliance.The weapon of success for Russia's individual income tax reform consists in the implementation of a single tax rate and the establishment ofscientific and reasonable pre-tax deduction standards.Pre-tax deduction eliminates the deficiencies of a single tax rate to a certain extent.To a certain extent,pre-tax deduction eliminates the disadvantages of insufficient flexibility of single tax rate in the adjustment of individual income redistribution.When paying individual income tax,taxpayers willfirst deduct the actual cost of living andthen bear the tax burden based on their actual tax ability,thereby making the reform of individual income tax be recognized and supported by the public.As the highlight of the tax reform,Russia'spre-deduction inindividual income tax is worth of research and reference.As a direct tax,individual income tax is most sensitive to the taxpayers.It is the core of China's deepening reform of the tax system,and plays a role in raising revenue and regulating income distribution for the country.Over forty years since the reform and opening up,the Chinesemarket economy has enjoyed rapid development,but the "profit-seeking" has resulted in uneven distribution,which has given rise to many social conflicts.The 19 th National Congress of the Communist Party of China revised the main contradictions in Chinese society,and the contradictions brought by the unbalanced development have become the focus of China's future socioeconomic development.This indicates that individual income tax will play the role of regulating income distribution in the future.In the meantime,in the Government Work Reportof2018,China has made it clear that individual income tax will be deducted from expenses related to children's education,medical care for major diseases to reduce the tax burden,thus protecting the rights and interests of taxpayers.The pre-tax deduction of individual income tax is an essential part of the taxation basis.With the combination of horizontal and vertical fairness,building a scientific and reasonable deduction standard based on the taxpayer's actual ability and standardizing the tax base for individual income tax to implement fair tax burden,where high-income groups pay more tax,and low-and middle-income groups pay less tax or being exempted fromindividual income tax,can shorten the gap between the rich and poor and alleviated various social contradictions related to people's livelihood brought by unbalanced development.Both China and Russia are faced with economic restructuring.Of course,Russia's individualincome tax reform has its merits,but there are significant differences in China's national financial situation,taxation environment,and social conflicts.Therefore,when studying the reform of individual income tax in Russia,we should learn from the part that is suitable for China's individual income tax reform,namely,the pre-tax deduction.The increase of special deductions is one of the development paths for China's individual income tax reform.The degree of scientificity and reasonableness of pre-tax deduction,as a major part of individual income tax base,directly affects the taxpayer's tax burden.At the same time,it also determines the strength of the redistribution effect of individual income tax,so the reform of pre-tax deduction of individual income tax is of great significance in the future.This paper consists of three chapters.The first chapter summarizes the individual income tax reform in Russia,and elaborates the single tax rate and pre-tax deduction in the substantive law of the reform.Chapter Two concludes that Russia's single tax rate for individual income tax is not applicable toour country according to the actual needs of China,but the pre-tax deduction is worth of learning from.It also analyzes the current status of China's individual tax deductions.Chapter Three makes proposals for increasing specific deductions in the reform and improving the system of tax administration and tax collection,thus attempts to make substantive recommendations for China's individual income tax reform.Through research,this paper roughly reaches the following conclusions: First,Russia's individual income tax reform was successful for Russia.A single tax rate of13% eased the economic pressures of the federal government at the time.As the third largest tax category of the federal government and the first major tax category for local taxation,individual income tax plays a significant role in tax revenue-raising.However,the case in China is quite different.The individual income tax accounts for only a small part of China's financial situation,and it is not appropriate for China to implement single tax rate.Second,Russia's individual income tax has established a scientific and reasonable pre-tax deduction by eliminating the lack of flexibility in thesingle tax rate,thus better regulate the income distribution,where the social special deductions have implications for China's future increase of special deductions.Third,pre-tax deduction is an important part of the tax base,providing that taxpayers shall bear the tax based on their actual economic capability.Pre-tax deduction is a concrete manifestation of the taxation fairness.Fourth,this paper puts forwardproposals for the development path of China's future individual income tax reform.That is,adding more taxpayers' most needed pre-tax deductions in the livelihood,not limited to children's education and medical care for serious diseases.Referring to the case of Russia,in the pre-deduction of individual income tax,taxpayersmay choose a household joint declaration or a separate individual declaration forcategory limited deduction or total amount deduction,so as to truly reduce the taxpayers' tax burden,and indeed protect their rights and interests.