Statistics indicate that the country's tax income in the first half of this year reached 2,494.7 billion yuan (US$311.84 billion), a record six-month high.
In recent years, the publication of tax income figures has always drawn questions from the public. People are dissatisfied that taxation, still geared to increasing government income, has so far failed to be turned into a social-justice leverage.
It is particularly important that taxation's focus shifts from "efficiency first" to "fairness first" in the general context that a well-to-do social stratum has initially taken shape in the country, thanks to the 30-year-old reform and opening up while the poor population still finds the going tough. In addition, a universal social security umbrella is yet to be put in place.
While this situation remains largely unchanged, the disadvantaged groups would cast doubt about market-orientated reform. This, in turn, could lead to their resistance to the progress of the market-oriented economy, or in the worst scenario, social tumults.
Taxation policy is of vital importance in a market-economy country Friday. To win public support, the government should institute a social-justice-oriented taxation system - more so, a legislature-mandated mechanism from which all kinds of taxes stem, becomes an imperative.
In other words, if the taxation policy really serves the goal that "what is taken from the people is to be used for the good of the people", there would not be so much questioning about the rapid growth of tax income.
The fairness-oriented taxation policy boils down to bringing its function of regulating social-wealth distribution into play.
Over a long time, two chronic questions have been haunting the country's fiscal and taxation policy.
First, tax income is collected in a centralized way but the money is spent in a scattered fashion.
Second, orchestration is missing between tax collection and expenditure.
The two factors largely explain why the fiscal and taxation policy is not basically placed on the basis of fairness and social justice.
As a result, the fiscal departments are largely concerned about spending on economic undertakings while the taxation departments set their priorities on collecting more taxes to ensure revenue is always growing. All this is at the expense of the principle of social justice.
In view of the situation, the approaches to formulating fiscal and taxation policy need to be reformed.
First, overall arrangements should be made in working out taxation policy so that the principle of fairness materializes in the levying of various particular taxes. Otherwise, the taxation departments would again get too bogged down in technical details to the neglect of fairness and social justice.
Second, the share of spending on social security projects in the government budget ought to be largely expanded in a bid to regulate social-wealth distribution.
In this way, fair distribution of wealth can be guaranteed and, at the same time, rational flow of labor forces across society facilitated. This, in turn, helps restructure the consumption model and boost the total consumption volume. Insufficient consumption, a chronic problem pestering the Chinese economy for years, can therefore be effectively handled.
Third, a heritage tax should be introduced in the country to help narrow the gap between the rich and poor.
The heritage tax is particularly targeted at the rich. It is chiefly meant to bring about universal social justice rather than collecting revenue. Pilot projects of heritage-tax levying should be launched as soon as possible in the country where there is no such tax.
Fourth, effective measures need to be taken to prevent wealth from being channeled to some privileged groups through non-market avenues.
This is directed at the groups and economic entities that monopolize certain kinds of resources such as petroleum and electricity.
Through the means of budget and fiscal and taxation policy, we can enable the general public to enjoy a share of the so-called "monopoly profits". For example, the massive profits reaped by monopolizing State-owned corporations belong to the general public in a sense and should be used for the improvement of the public's well-being, rather than using them to fatten the wallets of the personnel and staff in these entities.
Fifth, all kinds of taxation and expenditure means should be applied to facilitate the formation of a sizable middle social stratum in the country.
Western market-economy countries have instituted and are enjoying a stable social system because, in large measure, there exists a big middle class in these countries. This social stratum plays an important stabilizing role, preventing society from going to extremes and helping the political infrastructure remain in the state of harmony in the long term.
In China, which is transiting from a command economy to market economy, the introduction of a market economic set-up brings polarization, which is detrimental to social stability.
So, a spindle-shaped social structure, which means small at both ends and big in the middle, need to be nurtured for the sake of long-term stability. Taxation and expenditure means can play a big part.
(China Daily August 3, 2007)
