In 2023, the tax data of the world's three largest economies were released, and the results were shocking.
The tax scale of the United States and Japan has performed well as usual, but China's performance has been unexpected. In the post-epidemic era, the fiscal revenue of various countries has been hit and tax reform has become a hot topic.
So, in the face of adversity, what are the strengths and weaknesses of China's taxation?
The content of this article is written by quoting authoritative materials and combining personal opinions. The source of the literature and screenshots have been marked at the end of the article, please be aware.
Information Sources:
Sina Finance: The huge fiscal deficit in the United States poses a hidden danger to economic growth
Current Taxation Situation in the United States and Japan
A country's fiscal revenue is like a source of living water that nourishes people's livelihood, and taxation is undoubtedly the most important component of it. In 2023, against the backdrop of global economic recovery, the tax scale of the United States and Japan can be said to have reached a new high.
According to statistics, the US federal government's tax revenue in 2023 reached 4.88 trillion US dollars, an increase of 300 billion US dollars from 2022. This figure exceeds the total GDP of many countries.
The absolute advantage of the United States' taxation is mainly due to its strong economic strength and perfect taxation system. As the world's largest economy, the United States has a strong consumer market and innovation capabilities, which provides a solid foundation for tax revenue.
Although Japan's economic scale is smaller than that of the United States, its tax performance is also impressive.
Information Sources:
Reference News: Japan's national tax revenue hits a record high for four consecutive years, and fiscal tensions continue
In 2023, Japan's national tax revenue reached 72.1 trillion yen (about 450 billion US dollars), an increase of 1 trillion yen from 2022, breaking the historical record for four consecutive years.
This is mainly due to the improvement in Japanese corporate performance and the increase in consumption tax rates.
Data shows that Japan's corporate tax revenue reached 14.5 trillion yen in 2023, a record high; consumption tax revenue also reached 21.9 trillion yen, a year-on-year increase of 5.8%.
Despite the dual pressures of an aging population and the impact of the epidemic, the Japanese government has successfully achieved steady growth in tax revenue through a series of measures such as optimizing the tax structure and introducing foreign labor.
So, what was the tax situation in China last year?
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Information Sources:
Central People's Government of the People's Republic of China: Fiscal Revenue and Expenditure in 2023
China's tax revenue exceeds expectations
While the United States and Japan lead the world in tax revenue, China's tax performance in 2023 is also worthy of attention.
In 2023, the national general public budget revenue was 2167.84 billion yuan, a year-on-year increase of 6.4%, of which tax revenue was 1811.29 billion yuan, a year-on-year increase of 8.7%; non-tax revenue was 356.55 billion yuan, a year-on-year decrease of 3.7%.
Behind this report card is a vivid footnote that China’s tax reform has continued to make efforts and achieved remarkable results.
Looking at the composition of China's tax revenue, two highlights are particularly prominent: first, the strong growth of personal income tax revenue, and second, the eye-catching performance of corporate income tax revenue.
The outstanding performance of these two data not only epitomizes the steady improvement of China's economy, but also provides broad space for deepening tax reform.
In fact, in recent years, China's tax reform efforts have continued to increase, especially the personal income tax reform has attracted much attention.
In addition to normalized tax reduction measures, another main line of China's tax reform is to optimize the tax structure and improve the fairness and efficiency of taxation.
On the one hand, China is accelerating the improvement of the local tax system and will uniformly implement real estate tax across the country starting in 2023. This will not only help regulate the real estate market, but also provide a stable source of tax revenue for local governments.
On the other hand, China is actively improving the consumption tax system, and will include some high-energy-consuming and high-pollution products in the scope of consumption tax collection in 2023, guiding green and low-carbon consumption and promoting sustainable economic and social development.
All these innovative tax measures demonstrate the systematic and forward-looking nature of China's tax reform.
China, the United States and Japan have their own tax policies
Looking through the taxation phenomena of China, the United States and Japan, it is not difficult to find that each country's taxation policy has its own unique advantages and characteristics.
The U.S. tax structure is dominated by income tax, with personal income tax and corporate income tax together accounting for more than 80% of the federal government's total tax revenue. This tax system design is highly consistent with the U.S. value concept of advocating individualism and encouraging innovation and entrepreneurship.
However, this tax system also has certain drawbacks, such as overly complex tax policies, high compliance costs, and the possibility of creating room for "tax evasion".
In recent years, there have been constant calls for tax reform in the United States. How to further simplify the tax system and improve tax efficiency while maintaining tax advantages has become a difficult problem that the United States urgently needs to solve.
Unlike the United States, Japan's tax structure is relatively balanced, with income tax, corporate tax and consumption tax accounting for about 80% of the country's total tax revenue.
Through moderately progressive tax rates and a broad tax base, the Japanese tax system has achieved remarkable results in promoting social equity and alleviating the gap between rich and poor.
However, against the backdrop of an aging population and increasing social welfare spending, Japan's taxation also faces sustainability challenges. How to achieve a balance between taxation and spending in areas such as pensions and medical care is a difficult problem facing Japan.
In contrast, China's tax structure is at a critical stage of optimization and adjustment.
Since the reform and opening up, China's tax system has undergone a major transformation from "mainly turnover tax" to "equal emphasis on turnover tax and income tax". In the future, China will further improve the modern tax system and better play the basic and pillar role of taxation in national governance.
Taxation is related to national economy and people's livelihood
The formulation of tax policies is certainly important, but what is more crucial is to ensure that the policies are implemented and effective, and to truly play a positive role of taxation in national governance. This is a daunting challenge for any country.
Although China has not yet faced the same severe problem of population aging as Japan, it also faces multiple challenges in tax reform and social governance.
In 2023, although China's tax revenue achieved rapid growth, there are still many areas that urgently need to be improved. For example, although the reform of personal income tax has made positive progress, there is still much room for improvement in narrowing the income gap and promoting social equity.
For example, real estate tax reform has attracted much attention from the society. How to ensure the stability of local fiscal revenue while regulating the real estate market still needs continuous exploration in practice.
In general, promoting tax reform is not only related to the modernization of national governance, but also to the vital interests of every ordinary citizen. Looking to the future, accelerating the construction of a modern tax system and improving the national governance system is a long-term and arduous task facing China.
This requires that we should base ourselves on China's national conditions, focus on long-term development, and steadily advance tax reform based on summarizing international experience.
Standing at a new historical starting point, China's tax reform has a long way to go. Only by advancing the reform step by step with a sense of urgency and a sense of responsibility that no one else can do it but us, can we provide solid tax support for the comprehensive construction of a modern socialist country.
Conclusion
Taxation is the foundation and guarantee of national governance. The differences in tax scale and structure among China, the United States and Japan reflect the development paths and governance models of different countries.
Through the unique perspective of taxation, we see the opportunities and challenges that every country faces in its development, while also feeling the difficulty and complexity of tax reform.
I believe that in the future, China’s tax work will become more and more perfect, and China’s tax situation will be even more impressive.
