A Study Into The Institutional Transition Of Tax System In China Since 1949

Tax system refers to national regulations and standards of conduct for tax activities, and it is a legal basis for national tax authorities to levy taxes from the taxpayers. It is also statutory criteria for the taxpayers to perform their obligations. In any country, tax system must be determined by their level of productive forces, relations of production nature, and system of economic management, all of which display the features of political, social, economic and legislative institutions. Appropriate tax system will effectively promote economic and social development as well as political stability, whereas unsuitable tax system will hinder the productive forces development and ruin political and economic stability in the society.The transformation of tax system itself is a response to national crisis or pressure in financial revenue. Whether the response is timely and accurate or not will directly affect national long-term peace and stability for the rulers. As a result, the evolvement of tax system tends to be impelled and initiated by the national rulers. A country arranges expenditure according to acquired financial resources. Once the expenditure is determined, it will become a driving force of keeping the taxation. If a country cannot get at least equivalent revenue income after reforming its tax system, it will deny the reform. Consequently, understanding and cognition of ruler's conduct is a key for us to perceive the institutional transition of tax system. However, the direction of tax system evolvement is not merely determined by rulers. Any achievement of tax revenue is a fixed contract formed after a long-term conflict among nation and society. Under this contract, both sides of the tax system have established their respective rights and obligations. That is to say, tax system may be also considered as a game consequence between rulers and common people. If the rulers ignore the interest of common people, game equilibrium will not be reached. Then, this deviation will inevitably cause revolt, thus the payment for the rulers must be lowered.In the last thirty years, China has experienced unprecedented transformation. In this period, many social economic problems have been uncovered. Moreover, they appear to be relatively fierce. Currently, those conflicts and problems in our country to some extent are the result of tax system that is inadequate and fails to function as regulating macroeconomic operation and narrowing income gap among the social members. Chinese tax system has gone through thirty years, in which it has been continuously reformed and modified, but it still has many drawbacks. Many aspects still don't adapt to current Chinese economic development. Therefore, it is our crucial job to establish a tax system considering nation and people, efficiency and equality.This thesis applies theory of new institutional economics and comes to a conclusion concerning the evolvement of tax system in China since 1949. Firstly, under the traditional planned economic system, the economic activities were like a giant corporation centered on a country. The main aim for the tax system was to accumulate and raise capital. Secondly, the institutional transition of tax system embodies reform of governmental management system, which is from centralization to decentralization and then centralization again. We may say government always searches for the best management system and certain balance between centralization and decentralization. Thirdly, it is an inevitable tendency to establish market-oriented and equality of property right system and tax system based on just, fair and open principles when traditional society changed into modern and naturalized society into industrialized one.The structure of the thesis is as follows.The first part is introduction. Through the systematic illustration of institutional transition theory, the thesis is to study the institutional transition of tax system from the perspective of new political economics.The first chapter firstly analyzes the nature, composition, function and effect of tax system. Then a theory frame related to tax institutional transition is given.The second chapter firstly comments on institutional feature of our traditional economical system. Then the fiscal system under planned economy is analyzed. The necessity of fiscal system reform is discussed in theory and history. Eventually, it points out the inner logic and evolvement features of tax institutional transition under traditional planned economy.The third chapter analyzes first the fiscal pressure from reform, and the fiscal significance for economic institutional transition. Then fiscal lump sum becomes the subject so that it reveals the rationality and disadvantages of Chinese fiscal system reform in the 1980s.The forth chapter mainly analyzes a series of new challenges for tax system in China since 1990. From then on, China entered into a new era.The fifth chapter is also the last chapter. It is the conclusion of the thesis.