Personal income tax reform promotes modernization of national governance

The significance of personal income tax in national governance is self-evident. In the implementation of the law, taxpayers need to understand their tax obligations under tax laws and pay taxes in accordance with the law, and cannot evade taxes; For tax authorities, an efficient tax collection and management system should be established to provide taxpayers with high-quality and convenient services, improve tax collection and management efficiency, and ensure the smooth implementation of tax laws

Recently, the fifth meeting of the Standing Committee of the 13th National People's Congress voted to pass the decision on amending the Personal Income Tax Law. The revision of the Personal Income Tax Law this time not only brings direct dividends to taxpayers through tax reduction measures such as increasing the "threshold" and adding special additional deductions, but also realizes a significant transformation from a classified tax system to a comprehensive and classified personal income tax system, further enhancing the important role of personal income tax and overall tax in promoting the modernization of national governance, and the impact will be far-reaching.

Personal income tax is an important tax widely levied by countries around the world, playing an important role in raising fiscal revenue and regulating income distribution. It is the main tax type in most developed economies and has become the third largest tax type in China. Since the establishment of the individual income tax system in our country, a classified tax system has been implemented, which taxes different types of income separately. Although this method has the advantage of simple management, it has not comprehensively measured individual income and is difficult to fully reflect the principle of affordability, which is not conducive to regulating income distribution. A comprehensive tax system can better reflect an individual's overall tax burden capacity, enabling taxpayers to bear the tax payable according to their actual ability. The combination of comprehensive and classified tax system combines the advantages of both and has become the direction of reform.

Due to the necessity of implementing a comprehensive tax system, starting from the Ninth Five Year Plan, the central government has repeatedly proposed the establishment of a "comprehensive and classified" personal income tax system through a series of reform deployments. The comprehensive tax system is subject to tax administration and social supporting management conditions, and needs to be gradually promoted. This reform can be described as a sharpening of the sword over the past twenty years. Nowadays, the new tax law includes four types of labor income, including wage and salary income, labor remuneration income, manuscript remuneration income, and franchise fee income, in the scope of comprehensive taxation, and applies a unified progressive tax rate for excess income. This marks a historic step in the reform of individual income tax and even the entire tax system.

Taxation plays a fundamental, pillar like, and safeguard role in national governance. As an important tax type, the significance of personal income tax in national governance is self-evident. This reform establishes a comprehensive and classified personal income tax system. Based on the implementation of partial income comprehensive collection, it improves the basic deduction standard, increases special additional deductions, optimizes and adjusts the tax rate structure, and expands the range of low-end tax rates to make the level of personal income tax burden more reasonable, optimize the distribution pattern of national income, effectively regulate income distribution, and promote social fairness and justice.

The transformation of tax management mode is another important aspect of this reform. Under the classified tax system, a tax collection and management model mainly based on "withholding and payment" is implemented, and taxpayers basically only pay taxes through their units. The new tax system combines withholding and self declaration, which means that a considerable number of individuals will directly face the tax authorities, and their tax awareness will continue to be strengthened and improved. At the same time, the implementation of the new tax system will also promote the construction of personal income and property information systems, and enhance the informatization level of national governance. Taxation is connected to both the country and taxpayers, and the implementation of the new tax law will shape the relationship between individuals, society, and the state from multiple aspects, enhancing the country's governance capacity.

The life of law lies in its implementation. After the new tax law is passed, it is urgent to formulate and implement detailed rules. The implementation rules should fully reflect the spirit of individual tax laws, especially in the specific provisions of special additional deductions, which should embody the principle of fairness and facilitate taxpayers to enjoy dividends, reduce compliance costs and management costs. In the implementation of the law, taxpayers need to understand their tax obligations under tax laws and pay taxes in accordance with the law, and cannot evade taxes; For tax authorities, it is necessary to establish an efficient tax collection and management system, provide high-quality and convenient services for taxpayers, improve tax compliance and social satisfaction, enhance tax collection and management efficiency, and ensure the smooth implementation of tax laws.

The reform of individual income tax is not achieved overnight, and this amendment can also be seen as a new starting point for the reform. With the improvement of tax collection and management and supporting conditions, we should continuously summarize the experience of reform practice, deepen relevant reforms, gradually expand the scope of comprehensive taxation, improve expense deduction, optimize tax rate structure, and actively respond to the concerns of the general public.

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