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China’s Taxation System: Problems and Policy Options in Promoting Fair Distribution of Residents’ Income(No 41, 2016)


By Zhang Liang, Member of Research Team on “Reform of China’s Income Distribution System”, Research Department of Social Development, DRC

Research Report, Special Issue, No 41, 2016 (Total NO 1516)

Abstract: Taxation plays an irreplaceable role compared with other policy means in promoting fair income distribution. Given the too-high percentage of indirect taxes, unreasonable configuration of tax types such as individual income tax, consumption tax and property tax, weak capability of tax collection and administration and relevant problems, China’s taxation system has a relatively weak function in promoting fair income distribution. We should continue to optimize tax structure in the future so as to really construct a double-principal tax system model; we should enhance the function of individual income tax in adjusting income tax distribution by reforming the tax collection mode, improving tax rate design and expand tax coverage; we should accelerate consumption tax reform by focusing on enlarged tax collection scope, reasonably-designed tax rate and reformed tax collection mode; we should continuously reform and improve the property tax system and strengthen tax collection on the entire property sector, including property ownership as well as donation and inheritance sectors; we should enhance the collection and administration of social security contributions; we should also improve the ability relating to tax collection and administration so as to provide, through a proper taxation system, a crucial guarantee for the promotion of fair income distribution.

Key words: taxation system, residents’ income, fair distribution, problem, policy options