What are taxes and fees?

Changing fees into taxes, also known as tax and fee reform, refers to replacing some fees with tax characteristics on the basis of cleaning up and rectifying existing government fees, further deepening the reform of fiscal and taxation system, and initially establishing a government revenue system with taxes as the main body and a small number of necessary government fees as supplements. Its essence is a major reform measure that must be taken to standardize the government revenue mechanism.

Topic origin

The exploration of changing social security fees into taxes has been going on for many years. Recently, with the active promotion of relevant people in State Taxation Administration of The People's Republic of China, the related work of changing social security fees into taxes has once again aroused heated discussion from all walks of life. The raising of social security fund is changed from "fee" to "tax". Although it is only a word difference, it contains profound meaning. At the beginning of the establishment of China's social security system, social security funds were raised through "payment". Social insurance premiums have played a "breakthrough" role in establishing a modern social security system, which is of great significance. With the deepening of reform and opening-up, the profound changes in market economy relations and the continuous advancement of social security system reform, the disadvantages of social security fees are increasingly apparent. It has become a consensus to replace "fees" with "taxes", and it is imperative to change social insurance fees into taxes. What are the limitations of social security fees? What are the advantages of social security tax? Is it feasible to change "fee" to "tax" and will it increase the burden on the people? This topic is discussed by our special experts.

Limitations of Social Security Fee and Advantages of Tax

Shen Shuguang

The problem of "changing fees into taxes" in social insurance is essentially a change in the specific form of social insurance funds. Theoretically, this is another question of how to choose the social insurance fund raising mode.

There are three modes of raising social insurance funds in the world.

Looking at the implementation of social insurance systems around the world, the existing models can be divided into three categories: pay-as-you-go system, complete accumulation system and partial accumulation system, and the corresponding specific financing forms include social insurance tax, social insurance overall payment and budget fund account system. Theoretically, when a country chooses the pay-as-you-go system as the social insurance fund raising mode, there is usually no strict restriction on whether to levy "social insurance tax" or "social insurance overall payment", because the pay-as-you-go system is characterized by overall arrangement of social insurance funds to balance the current income and expenditure; However, if the fund raising mode is complete accumulation system and partial accumulation system, the state is generally required to choose the form of "social insurance overall payment" to raise funds, because at this time the social security fund is essentially "personal" and "exclusive".

The initial "payment" model has played a breakthrough role in the establishment of a point-to-area social security system.

On the question of whether to implement "fee" or "tax", China made a decision at the early stage of establishing the social security system, which was determined by the economic system and the main forms of the market at that time. From 1984 to 1986, China began to try out the social pooling of retirement expenses for employees of state-owned enterprises in some areas, set up employee pension insurance funds, and implemented the financing method of combining enterprise contributions with individual contributions. Under the "pay-as-you-go" mode, China chose to raise funds through "payment". As the key moment of the transition from planned economy to market economy, most economic entities in the market are still state-owned enterprises and institutions. 1in March, 1995, in view of the increasing pressure of "hidden debt" brought by the pay-as-you-go system with the change of population age, the State Council promulgated the Notice on Deepening the Reform of the Old-age Insurance System for Enterprise Employees, which basically established the old-age insurance system with a partial accumulation mode combining social pooling and individual accounts in China, but in fact, the specific form of "payment" has not changed.

The "paid" model shows more and more limitations.

Although China's social insurance financing model and specific forms are theoretically matched, from the ultimate goal of China's modern social security system, it is found that the "social insurance overall payment" system shows more and more limitations, mainly in the following aspects:

-Restrictions on expanding safeguards coverage. The administrative means and regulations embodied in "payment" are often more binding on state-owned enterprises and institutions, but less binding on a large number of private and foreign-funded enterprises, thus exempting them from paying social security contributions, let alone realizing the long-term goal of bringing farmers into the security system.

-unable to form a stable insurance fund. Due to the low level of legislation on which payment is based, there are often phenomena such as default and evasion when collecting social insurance premiums, and it is difficult for law enforcement departments to impose compulsory punishment. Even some local governments abuse the power of "exemption" out of the enthusiasm of introducing foreign capital and protecting local enterprises, resulting in a low annual collection rate of social insurance premiums nationwide, which cannot be effectively guaranteed.

-high management cost. Because the collection of "fees" is outside the financial system, local administrative departments have formulated specific standards and implementation methods, which leads to the fact that multi-departments and multi-subjects in various regions have certain power over the income and expenditure of old-age insurance, industrial injury insurance, medical insurance and other expenses, which not only easily leads to administrative inefficiency, but also makes supervision "absent" to a certain extent. A few days ago, the "social security fund audit problem" that people discussed hotly fully exposed the disadvantages of this system.

"Taxation" is a better choice under the current situation.

In view of these disadvantages of "overall payment", levying social insurance tax has naturally become a concrete form of raising funds for reform. It can be said that in theory, "tax" is a better choice under the current situation, and its advantages are mainly reflected in several aspects.

First of all, the legislative level of "tax" is obviously higher than that of "fee" and it is absolutely rigid in the implementation process. Moreover, after years of tax law education, citizens have a higher awareness of tax payment, thus ensuring the stable collection of social insurance funds.

Secondly, the management cost of "tax collection" is lower than that of "payment" because "tax" is included in the national unified financial budget and is collected by the tax authorities according to law.

Thirdly, levying social insurance tax is obviously conducive to expanding the coverage of the social security system, and bringing private, "foreign-funded" and township enterprises, which are the mainstay of the market economy, into the social security system, thus providing protection for a large number of laid-off workers and retirees of such enterprises and a huge floating labor force. In addition, it laid the foundation for bringing farmers into the social security system.

Finally, the collection of social insurance tax is also conducive to the redistribution of social wealth, which can alleviate the weak function of social wealth redistribution to some extent.

(The author is the director, professor and doctoral supervisor of the Social Security Research Center of Sun Yat-sen University. )

Social security fee should be changed to tax steadily.

Weihua Yang

Recently, the relevant person in charge of State Taxation Administration of The People's Republic of China revealed that during the Eleventh Five-Year Plan period, the tax authorities will carry out theoretical research and legislative preparations for the social insurance fee to tax. The author believes that the direction of China's social security system reform is to change social insurance fees into taxes.

It is a scientific choice for China to change social insurance premiums into taxes.

Changing social insurance premiums into taxes is conducive to raising social security funds. Compared with the collection of social insurance premiums, the collection of social security tax is based on the high degree of law, strong authority, more openness, fairness, timeliness and stable organizational income.

Changing social insurance premiums into taxes is conducive to establishing a standardized social security management system and reducing corruption. Levying social security tax is conducive to the establishment of a trinity management system of tax department collection, financial department management and social security department expenditure, which restricts and supervises each other. This system has been proved to be effective by the practice in many countries, which is conducive to strengthening supervision, plugging loopholes, ensuring the safety of funds and reducing corruption.

Changing social insurance premiums into taxes is conducive to strengthening collection management, reducing collection costs and improving collection efficiency. Independent collection by tax authorities can avoid the phenomenon of multi-door and multi-head management and reduce friction; At the same time, the tax authorities have high quality personnel, rich experience in collection and management, advanced means, and a comprehensive grasp of tax sources, which can strengthen management, reduce the phenomenon of non-payment, underpayment and procrastination, reduce the cost of collection and management, and improve the efficiency of collection and management.

Changing social insurance premiums into taxes is conducive to improving the efficiency of the use of social insurance funds and protecting the interests of payers. Levying social security tax, with clear system, unified standards, standardized management and guaranteed income, can effectively safeguard the legitimate interests of payers. It can avoid the situation that workers pay insurance premiums in place A and can't get insurance benefits in place B at this stage; At the same time, it can adjust the surplus and deficiency of regional social insurance funds and ensure the timeliness and stability of expenditures in various regions.

The conditions for changing social insurance premiums into taxes have basically been met.

The deepening of China's reform and opening up and the gradual establishment of a market economy system have created basic conditions for levying social security tax.

First of all, the tax source is rich. With the development of economy, people's income level is constantly improving. The increase in income provides a tax source for levying social security tax.

Secondly, the collection is guaranteed by law. Since the reform and opening up, China's tax legal system has been continuously strengthened. At present, the Law of People's Republic of China (PRC) on the Administration of Tax Collection and its implementing regulations have been revised and promulgated, the provisional regulations on the collection and payment of social security fees have been formulated, and the social security law is also being formulated. The central government can formulate social security tax regulations as needed to meet the tax requirements.

Third, it has a broad ideological foundation. Through legal education and collection of social insurance premiums, people have a better understanding of China's social security system, and they are prepared to pay social insurance taxes, and their awareness of participating in insurance and preventing old age has begun to increase.

Finally, I have some experience in collection and management. International experience can be used for reference in levying social security tax. At the same time, at present, the social insurance premium of the whole country 19 provinces and cities is collected by the local tax department, which has achieved remarkable results and accumulated certain experience.

Problems that must be solved before the fee is changed to tax

Although China has the basic conditions for changing social insurance premiums into taxes, some conditions are not mature enough, and the reform should be carried out steadily, not in one step. To this end, the author suggests that the following work should be done before levying social security tax.

Further accelerate the construction of the legal system. Although there is a good legal basis for levying social security tax at present, it is still not perfect, so it is necessary to formulate social security tax regulations; Second, the legislation of social security law also needs a process.

Unified collection of social insurance premiums. At present, China's social security fund is managed by finance, civil affairs, labor, health, personnel and other departments, which involves many departmental interests, division of departments and overlapping functions, increasing management costs and affecting management efficiency. In order to solve the contradiction between collection and management, we can consider changing the collection of social insurance premiums from different departments to local tax authorities, and changing the collection system of local tax authorities in some provinces into an independent and full-responsibility collection system to avoid interference from relevant departments.

Unify the collection standards and improve the overall planning level. Due to the uneven development in different parts of China, the collection standards of social insurance premiums in different regions are also different. First of all, we should unify the collection standards of social insurance premiums so that workers in various regions can get roughly the same social security. At the same time, the level of social overall planning in underdeveloped areas will be improved through financial transfer payments, and county-level overall planning will be promoted to provincial-level overall planning as soon as possible. On this basis, the social insurance premium will be changed to tax.

After the pilot, social insurance premiums should be changed to taxes. Levying social security tax involves a wide range, strong policy and many contradictions, so we can't rush into it. The author advocates that the social security tax should combine the unit total tax rate with the individual total tax rate, and the tax collected is divided into pension insurance fund, unemployment insurance fund, medical insurance fund, work injury insurance fund and maternity insurance fund according to regulations. At the same time, after the social security tax is levied, it is suggested to keep the "personal account" and implement the coexistence of social security taxes and fees in a certain period of time, and the taxes and fees will be uniformly collected by the tax authorities. "Personal account" is managed and paid according to the current method. This not only unifies the tax system, but also takes into account the differences and interests between regions.

(The writer is a director of China Taxation Society and director and professor of the Research Center for Taxation and Financial Management of Sun Yat-sen University).

Social security tax can improve the efficiency of social security system.

Liao Jiaqin

Social insurance premium or social insurance tax is an institutional arrangement for raising social security funds. Whether to adopt the form of fee or tax mainly depends on which form can improve the efficiency of the social security system.

At present, the inefficiency of China's social security system is obvious to all, and the key to improving the efficiency of the social security system is several aspects.

Greatly reduce the transaction cost in the collection process.

"Tax" is levied by the legislature and "fee" is levied by administrative regulations promulgated by the administrative organs, so "tax" is more mandatory and authoritative than "fee", thus greatly reducing the transaction cost in the process of collection.

Improve the participation rate of social security and expand the scope of social security.

Social security "fee to tax" can greatly expand the scope of social security objects, improve the overall level of social security funds, reduce the risk of social security fund expenditures, and provide residents all over the country with roughly the same level of social security services, thus improving the efficiency of the social security system. Because the social security tax should be regarded as the central tax after the social security fee is changed, it can improve the overall level of social security funds, and the central government can use the same standard to tax all social and economic organizations and their employees, thus expanding the scope of social security objects. At the same time, the central government can provide basic equal social security services for the whole country and eliminate the risk of social security expenditure in poor areas.

However, in the current collection form of social insurance premiums in China, social insurance premiums are collected by local governments. Due to the uneven economic development in different parts of the country, the income of social insurance premiums that local governments can obtain varies greatly, which makes the level of social security services that residents can obtain vary greatly. At the same time, because compulsory and authoritative social insurance premiums are much worse than taxes, local governments often do not force enterprises to participate in social insurance in order to attract investment, thus making a large number of "foreign-funded" enterprises and private enterprises not buy social insurance for ordinary employees at all. In addition, in the form of social security fees, when employees need to move from other places, the social security department usually only transfers individual contributions, not unit contributions, which makes migrant workers with high job mobility reluctant to participate in social security, greatly reducing the participation rate of the social security system, limiting the expansion of the scope of social security objects and excluding residents who need social security most.

Promote the rational flow of labor force and optimize the allocation of labor resources

Changing social security fees into taxes can promote the rational flow of labor, optimize the allocation of labor resources, and fundamentally improve the efficiency of social security system. The efficiency of the social security system is fundamentally reflected in providing a common "safety net" for the members of the whole society, so that the labor force population can enjoy basic social security services no matter what way they work and what social and economic organizations they work in, so that labor resources can flow reasonably among various economic organizations, and will not flow excessively to state-owned economic departments because of the differences in social security levels.

It has promoted fair competition among enterprises with different ownership systems, and prevented the value created by China's labor force from being transferred abroad for free.

In the current form of social insurance premium, because many private enterprises and foreign-funded enterprises have not purchased social insurance for their employees, employees have overdrawn their own future, but enterprises have not paid for it, which leads to the untrue product cost of private and foreign-funded enterprises. On the one hand, it intensifies the unfair competition with state-owned enterprises. On the other hand, in the case of product export, because the products of enterprises do not contain social security burden, they can be exported at a low price, which actually transfers the value created by China's labor force to foreign countries for free. Changing social security fees into taxes can not only promote fair competition among enterprises with different ownership, but also prevent the value created by China's labor force from being transferred abroad for free.

Changing social security fees into taxes is unlikely to increase the burden on units and individuals.

Whether the social security fee will increase the burden of units and individuals mainly depends on the reasonable definition of the social security level. If it is to maintain the current social security level of enterprise employees, it will not increase the burden on units and individuals. On the contrary, if the current social security welfare level of employees in government agencies and institutions is taken as the baseline of the national social security level, the burden level of units and individuals will be improved. At the beginning of establishing a unified national social security system, it is impossible to set the baseline as high as the national social security level. Therefore, it is unlikely that social security fees will increase the burden on units and individuals. Of course, for the units and individuals who are not insured at present, it is certain that the burden level will increase after the social security fee reform.

(The author is a Ph.D. and associate professor in the Department of Finance and Taxation, School of Economics, Jinan University)

If the tax rate is low, cover the towns first.

Lu Jianling

A perfect social security system must be able to properly solve the source of social security funds and choose a more efficient and fair collection method. Judging from the experience of social security system construction in other countries and China, levying social security tax is a better way to raise social security funds.

It is an international practice to raise social security funds in the form of social security tax.

Compared with the overall form of social security, the biggest advantages of social security tax are mainly reflected in the following aspects: first, tax is mandatory, on the one hand, it can effectively solve the problem of arrears and refusal to pay social security fees, and provide institutional guarantee for obtaining social security funds in full and on time. On the other hand, the reform of the collection system must be carried out through corresponding legal procedures, so as to better handle the interest relationship between the state and taxpayers; Second, the relative fixity of tax revenue, on the one hand, enables the government to predict the scale of social security income in a certain period and prepare for organizing social security payment, on the other hand, enables taxpayers to better predict the social security burden and make their choice of economic activities more rational; Thirdly, the standardization of tax distribution, on the one hand, can ensure the safety of people's life-saving money to the greatest extent and prevent social security funds from being misappropriated or eroded, on the other hand, it also provides conditions for realizing unified standard distribution in a wider range; Fourthly, a perfect tax collection and management system and the internal relationship between social security tax and current enterprise income tax and personal income tax can minimize the collection cost of social security funds. It is precisely because of the advantages of collecting social security funds in the form of taxes that it is not difficult to understand why many countries in the world that have established social security systems adopt social security taxes to raise social security funds. In our country, it is an inevitable choice to levy social security tax in time to improve our social security system, and the time is ripe at present.

Initially, it has the economic, social and collection basis for levying social security tax.

After more than 20 years of reform and opening up, China's national economy has advanced by leaps and bounds, and the income level of urban and rural people has been greatly improved, which has provided a reliable tax source basis for levying social security tax and expanding its collection scope from towns to rural areas.

In the process of market economic system reform, people have experienced the reform of pension system and medical system, and are suffering from risks and pressures such as unemployment and work-related injuries. The desire for social security has laid a social foundation for the implementation of social security tax. At the same time, the implementation of the overall system of social pension fund, medical fund and unemployment fund in the past ten years has also raised people's awareness of paying social security funds to a certain extent, which undoubtedly provided an ideological basis for levying social security tax.

For the vast number of urban workers (including insured migrant workers) and their employers, the social security tax levied is essentially a kind of fee-to-tax, that is, the original payment form is changed to tax, and its economic burden has not changed much on the whole. After levying social security tax, the compulsory and legal nature of tax will not only protect the legitimate rights and interests of employees from the system, but also play an important role in correctly handling the interest relationship between the state and employers.

The increasingly perfect tax collection and management system and its administrative efficiency provide the foundation for the collection and management of social security tax. Because social insurance premiums are generally paid and remitted by employers, and most employers are taxpayers of enterprise income tax, tax authorities have considerable advantages in controlling the sources of social insurance premiums. Practice has proved that collecting social insurance premiums by tax authorities is not only cheaper than collecting social insurance premiums directly by social security bureau, but also effective.

At the beginning of the implementation of social security tax, the tax rate should be maintained at a low level, and the collection area is mainly located in cities and towns.

Levying social security tax is an important step to improve China's social security system, but there are still many problems to be studied in order to give full play to the function of social security tax, especially to continuously improve the design of social security system. In the design of social bonded system, the main problem facing China at present is how to determine the social security tax rate and the coverage of social security tax.

I believe that starting from China's national conditions, in the initial stage of establishing a unified social security system, the characteristics of social security should be to achieve the minimum social security, and with the development of social economy, gradually improve the level of social security. Therefore, the social security tax rate should be maintained at a low level. In addition, considering the reality of unbalanced economic development among regions in China, it is suggested to implement regional differential proportional tax rate.

The problem of social security tax coverage is essentially whether social security tax is levied on farmers. From the general principle of taxation, the collection of social security tax should cover all members. However, because China's economy is still a dual economy, there are still serious differences between urban and rural areas and between rural areas. Therefore, in the early stage of the implementation of social security tax, its collection area should be mainly located in cities and towns, and rural areas with relatively developed economy can also collect social security tax and enjoy the same social security treatment as local urban workers. With the strengthening of rural economic strength, especially local financial resources, the unified social security tax system in urban and rural areas will be gradually realized.