Papers on bank deposit interest and profits and taxes

On June 29th, the 28th meeting of the 10th the NPC Standing Committee authorized the State Council to suspend or reduce the individual income tax on savings deposit interest according to the needs of national economic and social development. This means that the State Council can decide to cancel or reduce interest tax at any time.

Cancellation or reduction of interest tax is bad for the current stock market. But the negative impact on the stock market itself is limited. Although some insiders believe that the abolition of interest tax is equivalent to raising interest rates by 0. 765%, equivalent to an increase of 2. 83 interest rate (assuming that the interest rate is raised by 0. 27%)。 But we should also see that the current one-year bank deposit rate is only 3. 06%, no more. Compared with the investment income of the stock market, such interest rate level is obviously not attractive enough. For those funds that enter the stock market, it is impossible for them to withdraw from the stock market and flow to banks.

Moreover, for the stock market, the cancellation or reduction of interest tax may just confirm an ancient saying: it never rains but it pours. This is mainly due to the following three reasons.

First, the cancellation or reduction of interest tax will not increase the cost of listed companies and will not harm their interests. Although according to the popular market view, canceling interest tax is equivalent to raising interest rates by 76. 5 basis points, but the cancellation of interest tax does not mean raising interest rates after all. Because raising interest rates usually increases both deposit interest rates and loan interest rates, for listed companies, raising interest rates usually means an increase in production costs. However, the cancellation of interest tax obviously does not involve the increase of loan interest rate, so it will not affect the production cost of enterprises and the profitability of listed companies.

Second, the cancellation or reduction of interest tax is good for listed banks. Although the cancellation or reduction of interest tax is not attractive to stock market funds, it is still attractive to social idle funds. Therefore, the cancellation or reduction of interest tax will help banks attract more social deposits, which is obviously beneficial to the development of listed banks. However, in view of the fact that listed companies in banks occupy a large weight in the stock market at present, the stable development of listed companies in banks is also conducive to the stable development of the stock market.

Third, the cancellation or reduction of interest tax may bring benefits to the stock market. Although interest tax is different from dividend tax and dividend tax, on the whole, interest tax and dividend tax are very similar in nature. For example, interest refers to the interest earned by individuals owning creditor's rights, and dividend refers to the dividend earned by individuals owning equity. It is this similar nature that people usually compare the two in reality, and even the tax rate is the same, which is 20%. Moreover, if the negative interest rate of bank deposits is the reason to cancel or reduce the dividend tax, then the rate of return is not even as high as that of bank deposits, so it is more necessary to cancel or reduce the dividend tax.

In the case of canceling or reducing interest tax, it will also be the will of the people to cancel or reduce dividend tax. Once the dividend tax and dividend tax really keep up with the pace of interest tax, cancellation and reduction will obviously help to increase the investment value of stocks, which is a big plus for the stock market.