【Article/ Observer Network columnist Yang Sanyi】
On July 14, the website of the Ministry of Finance announced the fiscal revenue and expenditure in the first half of 2022, and the income from the transfer of state-owned land use rights was 2,362.2 billion yuan, down 31.4% from the same period last year. So where should the mainland's fiscal system go in the context of a slowdown in land finance?
Let's first look at the proportion and slowdown trend of mainland land finance.
First, let's popularize a basic concept - "the degree of dependence on land finance", that is, the proportion of land fiscal revenue to the total fiscal revenue of the whole country. Fiscal revenue is mainly the general public budget revenue, that is, taxation and government fund revenue, of which land transfer income is the main part of the government fund revenue.
Many people on the Internet use land and real estate-related taxes to calculate the degree of financial dependence on land is actually not right, this part of the tax includes deed tax, real estate tax, urban land use tax, land value-added tax, cultivated land occupation tax and other income, many of which are taxes on real estate in stock or transactions, and are not the main part of the government's "land sale" income.
The degree of financial dependence on land is formulaically expressed as: the degree of financial dependence on land = land transfer ÷ (general public budget revenue + government fund revenue)
Taking 2021 as an example, the national general public budget revenue is 202539 billion yuan, and the national government fund budget revenue is 9802.4 billion yuan, adding up to 3056.3 billion yuan, accounting for about 28% of the total GDP.
In 2021, the national income from the transfer of state-owned land use rights will be 8,705.1 billion yuan, accounting for about 28.96% of the national government revenue, that is to say, the mainland government's dependence on land finance in 2019 will be 28.96%.
Through the inquiry of the fiscal revenue and expenditure data released by the Ministry of Finance in previous years:
Scale chart of the amount of land financial dependence
From the data calculation, it can be seen that since 2015, the financial dependence of mainland land has soared from 17.30% in 2015 to 30.44% in 2020, and the proportion of this data has begun to decline since 2021, but the actual amount of land transfer fees is still rising.
The central government's thinking has always been to make the land finance soft landing, and gradually implement it through a series of policies.
So although the amount has been increasing, the growth rate has been declining year by year since 2017.
So how should fiscal revenue be adjusted when land finance begins to change? Personally, I think there are probably several ways out:
First, there is no choice of non-tax evil path: modern monetary theory
Modern monetary theory is Modern monetary theory, abbreviated as MMT. This theory is more complicated, simply put, domestic debt is not debt, taxation is to maintain the flow of money, is to ensure that commercial income has a channel to recover, so do not need to consider the fiscal balance, you can promote economic development through unlimited domestic debt. The oft-heard "quantitative easing" and "monetary policy linked to active fiscal policy" are all reduced versions of its power.
This theory is good or good, but there is a concept called "Minsky Moment", which in layman's terms: when the day is good, investors dare to take risks; The longer the good days, the more the investor takes risks, until it is over-risked. Step by step, investors will reach a tipping point where the cash generated by their assets is no longer enough to pay the debt they used to acquire the assets. The loss of speculative assets prompts lenders to recover their loans, leading to a collapse in the value of the assets.
The same is true of countries, and even now many countries may have reached this critical point, in the past, the interest rate of European and Japanese countries was close to zero, but when the United States began to raise interest rates, countries could only follow up, which eventually led to rising interest rates, financing costs are too high, and it is impossible to borrow new debt to pay off old debts, which eventually leads to national bankruptcy.
The first to thunderstorm is certainly a small developing country, Sri Lanka, the world's first country to advocate the MMT monetary theory of "unlimited money printing", is now bankrupt.
In addition, Japan has always been considered a practitioner of MMT monetary theory, but in fact, the countries of southern Europe may be more than enough.
For example, although Japan's government debt has reached an unprecedented 240% of GDP (compared with 128% in the United States and 66.8% on the mainland), it at least has an independent monetary policy that can have a range of abandonment of foreign exchange bonds. However, because the EU has a unified currency, countries cannot maintain interest rates through currency depreciation.
At present, the leverage ratio of government departments of the "five European pigs" is even 27% higher than that of the European debt crisis in that year, and they have not carried out substantial structural adjustment at all.
In the case of Italy, which has the strongest economic strength, its post-budget debt has reached 2.6 trillion euros in 2020, accounting for 155.7% of GDP, equivalent to 43,000 euros per capita (including newborns) debt, while the proportion of tax revenue to GDP will be 43.5% in 2021, with little potential for further increase. Once the EU raises interest rates, its interest payments and increased taxes cannot cover the inevitable borrowing, and the more interest it borrows, the vicious circle will soon collapse.
Mario Draghi, former ECB president known as the "Super Mario," resigned as prime minister on July 21, and while the obvious reason is that the parliamentary coalition is not united, Italy's deteriorating fiscal and financial situation may be a deeper cause.
Here are two news items on the same day on July 21, 2021:
The Bank of Japan held a monetary policy meeting on the 21st, and the meeting decided to maintain large-scale monetary easing with a majority of votes. The main content is to induce short-term interest rates at minus 0.1% and long-term interest rates at around 0%.
The European Central Bank announced on the 21st local time that it will raise the three key interest rates by 50 basis points, that is, the main refinancing rate to 0.5%, the marginal lending rate to 0.75%, and the deposit credit line interest rate to 0%. This is the first rate hike by the ECB since July 2011.
The European Union has decided to raise interest rates for the first time in eleven years, while Japan has stuck to a zero-rate policy. Therefore, it is foreseeable that the "European pig" countries will have a more serious debt crisis than in 2011, and unlike in 2011, the current economic weakness in Europe is superimposed on high inflation, and with the high inflation rate hike cycle in the United States, no one may be able to save them.
The mainland has always followed the policy of fiscal balance, and on October 24, 2020, at the 2020 Second Bund Financial Summit held by the China Finance Forty Forum in Shanghai, Vice President Wang Qishan proposed in his speech: "China's finance cannot take the crooked road of speculation and gambling, cannot take the wrong road of self-circulation of financial bubbles, and cannot take the evil road of Ponzi schemes." ”
On July 19, 2022, Premier Li Keqiang of the State Council attended the World Economic Forum's Special Video Dialogue on Global Entrepreneurs in the Great Hall of the People, delivered a speech and interacted with entrepreneur representatives, clearly stating: "Macro policies are both precise and powerful, reasonable and moderate, and will not introduce super-large-scale stimulus measures, over-issue currency, and advance the future for the sake of excessive growth targets." It is necessary to persist in seeking truth from facts, do our best, and strive to achieve a better level of economic development throughout the year. ”
Therefore, the mainland may temporarily increase its transfer payment due to the increase in deficit due to the epidemic, but it will not embark on the evil road of MMT for economic indicators, and it is still necessary to rely on taxes to solve fiscal problems.
Second, can real estate taxes be levied?
I was the first on the Internet to propose that the real estate tax is levied progressively according to the area excess, but after so many years, it is still difficult to achieve the unified collection of real estate tax nationwide and through its wealth adjustment in the short term, because after ten years of twists and turns in the national personal housing network, there may still be no great progress.
As early as June 24, 2010, at the "Conference on Accelerating the Construction of National Individual Housing Information System", the Ministry of Housing and Urban-Rural Development made a plan for the networking of personal housing information, saying that it would initially realize the networking of ministry, province and municipal systems by the end of December 2013 and basically establish a national personal housing information system.
And then there's the news:
After that, there was little reporting on the national networking.
On October 23, 2021, the 31st Session of the Standing Committee of the 13th National People's Congress made a decision authorizing the State Council to carry out pilot real estate tax reform in some areas.
The main points are as follows:
1. The State Council shall formulate specific measures for the pilot real estate tax, and the people's governments of the pilot areas shall formulate specific implementation rules.
2. In accordance with the principle of positive and prudent, comprehensively consider the deepening of pilot and unified legislation, and promote the stable and healthy development of the real estate market to determine the pilot area.
3. The real estate tax in the pilot areas is taxed on all kinds of real estate for residential and non-residential purposes, excluding rural residential land and its upper dwellings owned according to law. The owner of the land use right and the owner of the house are the taxpayers of the real estate tax.
4. The pilot period authorized by this decision is five years, and when the conditions are ripe, the law will be enacted in a timely manner.
Therefore, even if the real estate tax is levied, it is likely to be levied according to the city at the initial stage, and it is possible to reconsider the national real estate information network after the collection model is further improved.
Even if the current speed of promotion by city is not fast," Xinhua News Agency reporters interviewed the relevant person in charge of the Ministry of Finance on the pilot issue of real estate tax reform on March 16, 2022. Relevant responsible persons said that the pilot reform of real estate tax was carried out in accordance with the authorization of the Standing Committee of the National People's Congress, and some cities have carried out thorough investigation and preliminary research, but taking into account the situation in all aspects, the conditions for expanding the pilot cities of real estate tax reform will not be met this year. ”
If it cannot be networked nationwide but levied according to the city, then people who have houses all over the country may meet the exemption conditions or pay only a small amount of taxes everywhere, and it is difficult to adjust their wealth through real estate tax in the short term.
In this case, if a threshold is set up, such as 60 square meters per capita (Shanghai's current policy), due to the purchase restriction policy in these years, most people's homes in a city have only two suites, and only a small amount of tax is deducted by three or four people, which cannot make up for the land finance; If there is no threshold for collection and full collection, like the United States, auction real estate tax deductions are frequent, then under the current tax system in the mainland with turnover tax and withholding as the main means of collection, neither the people nor the tax authorities may be able to adapt.
Therefore, whether the real estate tax can be levied is unknown.
Again, how far away is the estate tax from us?
The full name of inheritance tax is inheritance and gift tax, and it is impossible to levy inheritance tax without gift tax. Because it is too much fun to give property to children in advance to avoid taxes.
The premise of increasing the tax on the increase in the gift tax is comprehensive financial asset monitoring, otherwise there is no difference between selling the house stock into cash for children and grandchildren to avoid taxes and not collecting it.
Therefore, as long as the mainland tax bureau cannot achieve comprehensive financial monitoring one day, it will not be able to increase the inheritance tax for one day.
Of course, the mainland is not just as simple as not collecting inheritance tax, according to the current policy:
Gifts of real estate to immediate family members are exempt from value-added tax, personal income tax, and deed tax is exempted from inheritance.
The inheritance or transfer of equity to spouses, parents, children, grandparents, maternal grandparents, grandchildren, grandchildren, siblings, as well as dependents or dependents who are directly dependent or supportive of the transferor, even if the price is significantly low, is not considered "without justifiable reasons".
That is to say, not only is there no inheritance tax, but the inheritance of real estate and the sale of equity at a low price can not be carried out in accordance with the principle of deemed sale or independent transaction, which is much lower than the tax on normal trading, and there is actually no tax design for the intergenerational inheritance of wealth.
Finally, comprehensive tax and financial monitoring and the establishment of a modern fiscal and taxation system are the ultimate solutions to mainland finance.
Recently by such an advertisement broke the defense:
So why do rich people go out and come back? From the perspective of finance and taxation, the mainland and foreign countries exchange the financial data of foreign residents in the mainland through the common reporting standard (the specific content of CRS can be seen in my "CRS as promised, how will overseas tax avoidance be restricted"), if the mainland immigrants to Australia become Australian residents, then they have to pay taxes on the income they get from China.
However, since the "Law of the People's Republic of China on the Administration of Tax Collection" on which the Mainland Taxation Bureau obtains data from banks stipulates that the tax bureau can only apply to the bank for household-by-account information inquiry, and cannot be provided by the bank to the tax bureau in batches (since the "Amendment to the Tax Collection and Administration Law of the People's Republic of China" proposed to amend this issue in early 2015, but it has been promoted from annual announcement to no longer in the legislative plan), the data handed over to the overseas tax bureau The Continental Taxation Bureau has not fully obtained. Not to mention the clearance survey of this information. So these rich people who have emigrated have used the mainland as a "tax depression" and are coming back.
In short, things like the importance of tax financial surveillance have been raised many times in my previous works and will not be repeated here. However, in the case of land finance began to transform, no longer as much financial support as in the past, if the mainland wants to maintain fiscal balance, what is more needed in the short term may not be to introduce new real estate taxes, inheritance taxes, which are costly and controversial, but to make up for their own deficiencies, first compare the most basic taxes with financial data to establish up, can carry out risk warnings on the situation that the declared income does not match the deposit increment, and can not let any anchor actor evade taxes for hundreds of millions.
First put away what should be collected, so that the rich people can not easily evade taxes, maintain a most basic social fairness, and then talk about how property taxes restrict the intergenerational inheritance of the rich, so that it is not the moon in the water, the tower in the sand, it is possible to implement it.
This article is an exclusive manuscript of the Observer Network, the content of the article is purely the author's personal opinion, does not represent the views of the platform, without authorization, may not be reprinted, otherwise it will be investigated for legal responsibility. Follow the observer network WeChat guanchacn, read interesting articles every day.