Abstract The manufacturing industry that has been “going away†has caused a lot of thinking, and the burden of taxes and fees has become the target of public criticism. Recently, the news about Cao Dewang, the chairman of Fuyao Group, investing 1 billion yuan in building an automobile glass factory in the United States has caused extensive public discussion. At the same time, Foxconn mother...
The manufacturing industry that has been “going away†has caused a lot of thinking, and the burden of taxes and fees has become the target of public criticism. Recently, the news about Cao Dewang, the chairman of Fuyao Group, investing 1 billion yuan in building an automobile glass factory in the United States has caused extensive public discussion. At the same time, Foxconn parent company Hon Hai Group also announced in a recent announcement that it is evaluating potential investment opportunities in the US. Therefore, many people said that "Cao Dewang is going to run" and "Foxconn is going to run."
In this regard, Cao Dewang pointed out in an interview with the media that the United States does not have a value-added tax, only 40% of the income tax, combined with various production costs, compared with the production in China, the total production profit in the United States will be 10% more. The rising cost of manufacturing in China has become the reason why Cao Dewang is considering relocation.
In the first half of this year, Li Shuguang, the chief professor of finance at Tianjin University of Finance and Economics, led a research group to investigate the tax burden of private entrepreneurs, during which he discussed with more than 100 entrepreneurs. The preliminary results of the survey show that entrepreneurs believe that the tax burden is very heavy and the proportion of heavier is very high, reaching 87%.
Li Shuguang said that the current 30%-40% macro tax burden is too high for enterprises, and can even be called the "death rate." Because most companies in China have a profit margin of less than 10%, the tax burden of 30%-40% will cause most eastern coastal processing enterprises to be in trouble and even lose their profits.
Regarding Li Shuguang’s investigation of “just in timeâ€, is the “death rate†to determine whether China’s macroeconomic development is too biased? Although some manufacturing companies that choose to leave will still focus on China, this leaves us with a lot of reflections. How should the next tax reform go?
In this regard, the reporter of "China Sankei Shimbun" conducted an exclusive interview with Professor Li Shuguang.
In recent years, China’s “total tax rate†has remained high.
"China Sankei Shimbun": What is the reason for inspiring your research on the topic of "excessive tax burdens for private entrepreneurs"?
Li Shuguang: There are many private entrepreneurs who reflect that their tax burden is too heavy. This kind of voice has heard too much, and it has also caused my concern: the domestic macroeconomic downturn has not been alleviated very well, is it not? Related to corporate tax burden? We all know that if the development of a company is not good, then the development of the macroeconomic level will be affected.
"China Sankei Shimbun": What is your research method for the conclusion of the "death tax rate", or how is the research process carried out?
Li Shuguang: We mainly do research, design survey questionnaires, conduct questionnaire surveys, hold symposiums, etc., and invest in a total of 500 or so enterprise samples by investigating the northeast, south, and east regions, and face each other through entrepreneurs. The conversation reached this information.
If we use the "total tax rate" indicator in the World Bank's World Development Indicators to measure the tax burden of Chinese companies, we can clearly see the conclusion. The total tax rate refers to the ratio of corporate taxes and compulsory contributions to commercial profits. In 2014 and 2015, China’s “total tax rate†remained at a high level of 68.5% and 67.8%, which is not only higher than that of developed countries. Similar developing countries.
"China Sankei Shimbun": You think that high taxes and fees will directly cause enterprises to "death". Is this somewhat exaggerating the impact of taxes and fees on the development of enterprises?
Li Shuguang: The research I have done is about taxation investigation, so I have to talk about taxation. At present, enterprises generally have a problem of low profit margins. The current tax system design rarely takes into account the profits of enterprises. Whether it is production or management, as long as it is a tax invoice, regardless of the profit problem, such tax system design is obviously problematic, plus various mandatory fees, these sums will greatly exceed the corporate profits. If a company has a large profit margin, its innovation and investment ability will be greater, and its development capability will be stronger. Do you say that taxation has nothing to do with corporate survival?
In the survey, we found several problems that were not noticed or less involved in the past. First, the two most unreasonable taxes that entrepreneurs choose the most frequently are corporate income tax and property-related taxes. Taxes are not the most tax paid by entrepreneurs, but it is clear that such “unobtrusive†taxes have caused greater problems for entrepreneurs in the process of collection. Second, entrepreneurs generally believe that taxation procedures and taxation design The influence of other factors on the enterprise exceeds the tax rate. This is somewhat different from our previous understanding of the “tax burdenâ€. In fact, it is more succinct to explain the basic principles of taxation, and it also shows that Chinese entrepreneurs have no judgment on the tax burden. Staying at the intuitive level; thirdly, the proportion of entrepreneurs with a heavy tax burden and a heavier tax rate is high, reaching 87%, and only 8% of the tax burden is considered acceptable, and only 1% is considered lighter and lighter. It reflects that the overall tax burden level in China may have seriously dragged down business operations. Fourth, when answering the question of how much the tax burden accounts for the proportion of turnover, 40% of enterprises believe that they should account for less than 10%, and 56% of enterprises It is considered to be between 10% and 20%. This shows that the tax burden of most enterprises in China exceeds their affordability, which is a euphemistic protest against excessive taxes and fees.
There is room for tax cuts for businesses
"China Sankei Shimbun": What do you think is the root cause of the problem of excessive tax burdens on domestic enterprises?
Li Shuguang: It is mainly the way of thinking in the design system. If the enterprise can be invigorated by adjusting taxes, and the enterprise is more powerful to develop, then the macroeconomic recovery is no problem.
The tax cuts in the United States were great during the Reagan era. Today, the United States is enjoying the tax cuts in the Reagan era. The Reagan administration even led the global tax cuts of the 1980s. The implementation of this tax reduction policy has brought economic prosperity; secondly, it has brought about a new technology and information revolution, including the digital technology boom we are talking about now, which is directly related to Reagan’s economics that advocated tax cuts that year. relationship.
Therefore, we need to change some of the traditional thinking of institutional design, and consider the issue from the perspective of the enterprise.
"China Sankei Shimbun": In fact, the current government is also advocating "tax reduction", such as "reduction of tax reform" and other "tax reduction" policies are also constantly introduced, you think that combined with the current implementation effect, how the actual role ? Is there still to be strengthened?
Li Shuguang: The central government's decision on "tax reduction" is very good. This is the need to cut China's current economic development.
There are still several aspects to consider as to how to put the issue of tax reduction into practice. First, there is still room for downward adjustment of income tax. Entrepreneurs reflect the heavy income tax, which we did not expect before the investigation, because the income tax is a very small tax, but obviously such "unobtrusive" tax has caused greater trouble to the entrepreneurs in the process of collection. The income tax involves the question of how much the company keeps profit. It is not that the enterprise has to pay for it. The entrepreneurs have their own plans. In the future, investment and entrepreneurship and technological innovation will require sufficient funds for the entrepreneurs. Therefore, we believe that income tax should also be alleviated.
Second, there is a possibility that the turnover tax will not be passed on. Once passed on, this will become the actual tax burden for the company. Calculating this part on the numerator of the company's total tax rate, and then dividing it by the company's net profit, will clearly see that there are multiple burdens on the company.
The third is five insurance and one gold. This is called employee welfare in China, but it is called labor tax in foreign countries. It is tax in nature. Employers pay mandatory taxes on employees. If this does not come down, the profit margin of the enterprise is still a problem.
Of course, there are still some other aspects that need to be strengthened. This shows that companies still have a lot of room for tax cuts.
"Light tax" in addition to "tax reduction"
China Sankei Shimbun: What opinions or suggestions do you have for the next tax system reform?
Li Shuguang: In the future, direct tax reform should be exerted, not only "tax reduction", but also "light tax" in the future. "tax reduction" is a policy, and "light tax" is a mechanism. If you only rely on "tax cuts", this year will be reduced, then next year, the next year? In particular, direct tax reform will be implemented in the future. If a new tax is added, the old tax will be re-modified. Therefore, tax reduction is the only way to leave room for future tax reform.
"Light tax" is to be constructed as a system. There are many experiences in this field in foreign countries. For example, in the event of economic recession, taxation must be controlled within a certain range, and a tax reduction or tax rebate mechanism should be implemented. This requires a certain degree of institutional development, including the participation of the government and the nationals.
Although it is still far away for us to establish such a mechanism, we must change from the concept that China is a heavy tax country in history. We not only need to spend a lot of money to run, but also cause great burden. In fact, the United States levies a property tax, there is no turnover tax, so its tax adjustment is reflected in the second half, so no matter what kind of industrial development can adapt to this mechanism.
Especially in the current digital economic revolution, these Internet companies do not have a large amount of physical costs, do not need inventory, and the industrial chain is very short. The biggest expenditure is labor costs, which requires the integration of artificial knowledge, and the current value-added tax in this respect. Can not be deducted, so it seems to be "loss" for the manufacturing industry. From a macro perspective, from the rising trend of the digital economy, we urgently need to fundamentally improve the current tax structure.
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