The Research On Chinese Tax Risk

The power of taxation is the greatest power of country, and the foundation of whole country's superstructure. The existence and eruption of tax risk, will not only decline governmental efficiency greatly, but also introduce economic, social and political crisis in specific period.Taxation can not only satisfy fiscal revenue, meet the need of government's function, but exert an important influence and function on economy and society and even politics. While it plays these important functions, it has tax risk too. From the angle of satisfying fiscal revenue, Marx said,"taxation is the milk mother of government".Taxation is the important form of government economic activity, and an important component of market economic activity. The more important thing is that tax activity is also the important regulating and controlling means for economic operation. If tax regulation is in good time and suitable, it will promote and foster market, otherwise will cause enormous risk.The importance of tax risk, different from financial risks and public financial risks, has not caused people's extensive attention yet. When study economic risk in China, we should not limit in company financial risk, public financial risk, or other risks, we should pay close attention to tax risk. Tax risk has already formed the important part in economic, social and even political risk in our country. Based on the review of literature about risk mechanism and risk theory, the dissertation will focus on a systematic study of tax risk, and put forward policy recommendation of preventing tax risk.Besides introduction, the dissertation includes five chapters. The first and second chapters are the basic theoretical analysis of tax risk. These chapters mainly analyze the definition and causation of tax risk. Chapter three is the positive analysis on Chinese tax risk, while the fourth and fifth chapters take precautions against tax risk. Chapter three and four are the keystone of the dissertation, which expatiating the causation and situation of tax risk from the angle of China. The main content and view are the following:The part of introduction sets forth the background and research meaning of the dissertation. It also gives the current situation in researching, provides the researching method and logic structure of the dissertation. In order to increase our understanding of tax risk, the part reviews the literature of risk theory, introduces the progress of risk research.Chapter one analyses the definition of tax risk. From the review of literature, we can find there are various opinions of risk and there isn't accurate definition of tax risk. We should first confirm the basis meaning of tax risk. The concept of tax risk is the theoretical foundation and primary prerequisite of tax risk analysis. For this reason, combined with the content of literature review, chapter 1 analyses the concept and causation of uncertainty. From the analysis, we can find that uncertainty is the logic starting point of tax risk. In order to understand the tax risk is a social public risk, the second section of chapter one specially analyzes the concept, origin, causation and characteristics of public risk. The dissertation combines positive analysis with normal analysis, and illustrates by a large number of instances. The analysis of public risk establishes the theoretical foundation of understanding correctly that tax risk is a kind of social public risk. On the basis of the above two sections, this chapter provides the definition, characteristics, key elements and classification of tax risk.Chapter two analyses the causation of tax risk. The causation of tax risk is complicated, which may be both tax and fiscal factors;economic and political factors; factors of social system and historical cultural tradition;domestic and international factors. Combined with the definition that tax risk is the social public risk, the dissertation suggests that it is the special attribute of taxation that determines the existence of tax risk fundamentally. The attribute of taxation is determined by the public power of country. The misuse of public power will introduce risk, which is a main reason of tax risk. Therefore, it is necessary to improve tax constitutionalism to restrain public power. In addition, even under the safeguard of tax constitutionalism, tax risk can't be eliminated completely. The uncertainty of economic and social activity, as well as the limited sense of person may produce tax risk in tax policy and tax system made by government in some period. According to such thinking, section one combines the special attribute of taxation with the relation among tax-levying, taxpayers and tax-expending, and analyses that if political power is abused to levy tax, it will worsen the relation among tax-levying, taxpayers and tax-expending, which will lead tax risk. Therefore, if the political power to tax is not limited, it must lead to tax risk.Chapter three is a positive analysis of tax risk. At first, the author analyzes the current situation of tax constitutionalism in China, and then carries on real investigation of tax system from tax burden and tax structure in our country. Finally, the author analyzes the risk produced in current tax administrative system. Section one analyzes the lack of tax constitutionalism in our country. The taxpayer's rights and interests haven't gotten enough protection by our Constitution. The administrative power interferes with tax collection excessively. There isn't legal principle of tax in constitutionalism. Therefore, there is sizable room for irregular tax legislation, tax collection and other nonstandard governmental revenue. The lack of tax constitutionalism will most probably lead to social public risk. Section two investigates tax risk system from total amount and structure. By comparing Chinese and foreign tax burden, this dissertation suggests that even though the macro tax burden in narrow meaning is not high in our country, it is higher in wide meaning if the extra-budgetary and outside-the-system revenue were added. The marginal tax burden enhances too fast which may cause tax risk. Section three is the positive analysis of tax risk in Chinese tax administrative. We can find that the insufficient of local tax revenue causes the inflation of extra-budget and outside-the-system revenue, which may bring out tax risk. The tax risk coming from the drawback of splitting national and local tax bureau is also analyzed in this section.Chapter four is the first part of tax risk prevention and management mechanism. Along with the improvement of our market economic system, administering taxation by law has become all the content of tax administration. Therefore, it is necessary to foster legal idea, improve tax system and ameliorate inner control system for tax risk control. Establishing systematic, integrated and effective tax risk managing system is the key factor. Faced by all tax risk in various fields mentioned above, we should take measures to minimize tax risk. This chapter and the next focus on two questions of preventing and managing tax risk. The first section suggests that tax constitutionalism is the entrance to solve Chinese tax risk problem. Tax risk is a kind of social public risk, therefore the primary task to prevent tax risk is improving tax constitutionalism from primary rule, strengthening governmental ability to take precautions against the tax risk. In order to realize tax constitutionalism, we should revise Constitution and relevant laws as soon as possible, stipulate not only taxpayer's obligation, but also taxpayer's basic right. Taxpayers own legislative power to tax, and enjoy supervisory authority to the collection and use of tax. Section two discusses how to improve tax system. Tax system is to take precautions against and control tax risk, guarantee the just, orderly regular system of social income distribution. The basic thinking of reforming tax system in our country is discussed. This dissertation thinks it is a constant historic and dynamic process to improve tax system. There exist no unique optimum tax standard that is valid everywhere. So, the tax system reformation and optimization in our country must comply with nature of things; proceed from reality at that time and local condition of China. Section three discusses tax distribution and the elimination of systematic factors causing tax risk. Unreasonable division of responsibilities and fiscal powers lead to many questions in tax distribution system in our country. To improve tax distribution system, we should divide responsibilities rationally at first. Based on the clear definition of responsibilities between central and local governments, we should delimit the expending ranges and income authorities for central and local governments; establish horizontal transfer payment system between central government and local governments, and vertical one among the same level of local governments. The expenditure of all governments should be conforming to their responsibilities, which will achieve both efficiency and fairness goal. Section four studies the optimization of tax administration. Tax system optimizing and tax administration optimizing are connected closely. In recent years, tax revenue in our country encountered hyper-normal and violent growth. There indeed exists growth potentiality of tax that can be excavated under current tax system. However, from the comprehensive view, current effective tax burden is not low and will promptly increase in the coming years. Under this situation, there won't be large possibility to expand governmental annual revenue through macro institutional adjustment of tax burden, and it is basically impossible to improve tax system at a great scale. In other words, to reduce tax risk by expanding the revenue scale of government, it can only be operated in current revenue system frame. The possible method is standardizing public revenue system, narrowing the difference between nominal and effective tax burden gradually, optimizing tax administration, reducing tax losses.Chapter five is the second part of tax risk prevention and management mechanism. As a special social subject, governments face various kinds of unknown political, economic, and social incidents, and carry on risk management, to make oneself carry on optimal disposition and use of various kinds of resources, reach one's own policy goal at the same time. From the point of government, tax risk control needs use specific technological means on the basis of general risk management. However, it is difficult to find material index to analysis tax risk, especially political tax risk. Therefore, what we can do at present is to carry on quantity analysis through relevant index, such as tax index itself, as well as fiscal and economic index. Section one sets up mechanism of tax risk control. The tax risk management should adopt systematic, standard and scientific procedures. We should first constitute risk management frame, then identify and evaluate tax risk. Based on this, we should establish an early warning index system of tax risk, carry on real-time pre-warning against tax risk, and take corresponding counter-measures. Section two is the case analysis of tax evaluation. The construction of tax risk system in China can't leave tax risk evaluation. Tax risk assessment plays a key role in the course of tax risk management. But, it is very hard to assess tax risk, which is even a world difficult issue. In this paper, through the establishment of macro-economic indicators, tax changes and tax targets, expenditure targets, the indicators opinion polls, the transparency of financial targets, I have had a tax risk assessment of china.The dissertation absorbs and refers existing research results of domestic and international academia. It analyses tax risk from history to reality, from foreign to our country, from theory to practice. The dissertation defines tax risk as a kind of social public risk, containing various fields, such as politics, economy, and society. The content of tax risk is extremely numerous. The dissertation does beneficial exploration in the following:1. The innovation of researching perspectives. The dissertation regards tax risk as researching object, and doesn't limit it in the risk emerging in tax loss. In the contrast, the author provides the concept of social public risk from the angle of political, economic and social risk. The tax risk have been integrated into the research of social public risk, which widen the research thinking of tax risk, and more useful for holding the characteristic of tax risk from macro level.2. Putting forward the concept of tax risk. Tax risk belongs to the social public risk. It is the possibility of difference between the expectation and result of tax activity, caused by policy and institutional arrangements as well as synthetical effect of various factors in the process of taxation, which will undermine the normal running of economy and society, threaten the security of country. The issue of taxation is not a pure economic issue, but the synthesis of economy, politics, and social concern. The definition in the dissertation can reflect the characteristic of tax risk even more.3. The characteristic of taxation has fundamentally determined the existence of tax risk. The characteristic of tax risk has determined that tax levying must rely on common power of country. Not be used properly, common power would cause risk. In is the most reason of tax risk. Therefore, we should improve the constitutionalism of taxation to restrain common power.4. The dissertation puts forward the inconsistency of tax policy goal, in the analysis of risk caused by tax policy and administrative system. Under the circumstances of uncertain economy and society, there is possibility of difference between tax policy and its expected objectives, which will cause tax risk. From the point of government function and value orientation, the dissertation holds that tax risk will be raised by the conflict of tax instruments, the latter is caused by the inconsistency of tax policy objective system.5. Tax risk may be caused by the uncertainty of policymaker's behavior. Tax policy is macro policy. People should participate in policy decision. However, as analyzed above, for short of tax constitutionalism in our country, people can't effectively participate in decision. Tax risk will caused by wrong decision of policymaker, in the case of incomplete information and limited sense of policymaker, even for the benefits for themselves.6. The course of tax risk dissolution is the course of institutional transform. It can be shown by improving tax constitutionalism, ameliorating democratic participating system, clarifying and dissolving risk by amending political system. It can also be shown by reducing public risk through tax risk management.7. Innovation on building indicator of the risk assessment of the tax system. In this paper, through the establishment of macro-economic indicators, tax changes and tax targets, expenditure targets, the indicators opinion polls, the transparency of financial targets, I have had a tax risk assessment of china.8. Innovation in theory. The dissertation integrates theory with practice, uses institutional economics, risk management theory, game theory and new public management theory, and joins various kinds of theory to research tax risk.