Study On Preferential Tax Policy Of Individual Annuity In China

Increasing life expectancy and falling fertility rate result in serious Aging Population trends. Under the challenge of worldwide population aging, the public pension systems in many countries are facing fiscal crisis. Many country’s government are carrying out many kinds of measures to reform the present public pension system in order to release the fiscal pressure.Among which the prominent point is to re-identify the role of government and market playing in bearing the old-age insurance responsibilities, and to extend the role of private sectors in providing pension plans. That is what we referred to as pension privatization reform. Against the aging population, the basic old-age insurance shared by all the people in the three-pillar system is facing the increasing pressure. So gradually reducing the substitution rate of public pension and improving the proportion of personal annuity in the three-pillar system may be the reasonable and realistic choice. The individual annuity is built in the overall structure of pension system in this thesis. Individual annuity is held as the third pillar among the three pillars in pension system, supplementary to the basic pension.Preferential tax policy is the national macrocosms support and tax credit for the development of a particular industry. Judging from the experience of other countries, from the maximization of self-interest, the individual who is under the incentives of the government’s preferential tax can actively involved in commercial endowment insurance plan. At present, the discussion on China’s individual Annuity becomes hotter and hotter, and by and by people have realized the significance of establishing individual Annuity in China. In the meantime, we are quite clear that the slow development of China’s individual Annuity is mainly due to the ungrounded favorable tax policies, which fail to trigger the interests of the individuals in individual Annuity. Nevertheless, the discussion on how to build individual Annuity tax system has never been conducted profoundly and systematically. Therefore, this thesis is aimed at explaining this difficult and challenging topic in a systematic manner, with the hope of contributing to the reform of public pension system.This dissertation clarifies some basic theories of individual annuity and its preferential tax policy. The dissertation discusses the individual annuity’s tax regimes, its socioeconomic effect and weakness in china, and then generalizes the individual annuity practices and experiences in some typical countries. On that basis, this dissertation analyze the feasibility of preferential taxation policies under our country’s special political, economic and cultural background, and then put forward the whole framework on the preferential tax policies based on the result of analogue simulation with CGE mathematical model.The major part of dissertation can be divided into five chapters.Chapter 2 is a theoretical analysis on individual annuity and its preferential tax policies. On the basis of the domestic and foreign existing researches, we associate individual annuity preferential tax policies with the labor, government, production and consumption in order to forming an integrated framework of analysis. From the macroscopic angle, we discuss the necessity of the tax and its influence on social and economic.Chapter 3 introduce present situation of individual annuity and its preferential tax policies in some typical countries and generalize experiences useful to us. There are five regimes of individual annuity tax system based on levying individual income tax in the three points, namely, contributing, investing and receiving benefits(E stands for "be exempt from taxes", while T stands for Tax):EET, TEE, ETT, TTE, and EEE. We select some typical countries and analyze their different characteristics about preferential tax policies of individual annuity. Through the comparative study of international individual annuity tax regimes, we found EET is more often than not taken as the individual annuity tax policy.Chapter 4 focuses on the conditions of individual annuity and its preferential tax policies in China. The first section states the difficult situation that China’s pension system is facing under the challenge of population aging and state that government should design more incentive motives for development of individual annuity. The second section shows the individual annuity has a further development space, and its development needs the support from government’s preferential tax policies. The third section puts emphasis on the analysis of tax regimes and its difficulties on preferential tax policies of individual annuity. In the last section weChapter 5 focuses on the quantitative analysis on preferential tax policies of individual annuity with CGE mathematical model. Through the research on saving and consumption behavior of different age population in China, we construct reasonable CGE model and design CGE model’s construction, equation, data and calibration process. At last we use dynamic general equilibrium theory to study the influence of present preferential tax to individual annuity.Chapter 6 put forward suggestions on design of preferential tax policy to individual annuity in China. According to simulation solution with CGE model, we compare the result of individual annuity under different tax policy and the corresponding rate, and then put forward the regimes of individual annuity tax system and policy suggestion in our country.