Research On The Principle Of Taxation By Consent In China

"Rule of law" and "rule of man" issue debated in the last century came to an end when it was about to enter a new century. One sub-article was added to Article Five of the Constitution PRC in the Constitution Amendment in 1999. The sub-article provides:"The People's Republic of China practices ruling the country in accordance with the law and building a socialist country under the rule of law." Since then, the rule of law has been formally set as a way of governing the country and China has embarked on the road of the rule of law. Later, the rule of law has been continually repeated and emphasized in important meetings and documents of the Communist Party and the country. In recent years, the rule of law has been even raised to an unprecedented height. In November 2012, the 18th CPC National Committee pushed comprehensively on the rule of law and also proposed that the rule of law be a fundamental way of state governance.Under this historical background, the principle of taxation by consent, as the reflection of the rule of law in the field of taxation, has embarked on the stage of history in China. In November 2013, The Decision of the Central Committee of the Communist Party of China on Major Issues Concerning Comprehensively Deepening the Reform passed by the third plenary session of the 18th CPC Central Committee proposed to carry out the Principle of Taxation by Consent. It was the first time for the principle to be put forward in the CPC document. Besides, to implement the Principle was stressed. In October 2014, Decision of the Central Committee of the Communist Party of China on a Number of Major Issues Concerning the Overall Promotion of the Rule of Law passed by the fourth plenary session of the 18th CPC Central Committee put forward to comprehensively boost the rule of law, of which the total goal was to build a socialist legal system with Chinese characteristics and to build a socialist country with rule of law. Shortly afterwards, the third session of the 12th National People's Congress amended the Legislation Law of People's Republic of China on March 15,2015. The newly revised " Legislation Law " provided that the basic tax system, like the establishment of tax, the determination of tax rate and administration of tax collection, could only be made by laws, through which the Principle of Taxation by Consent was formally established. What's more, On March 26,2015, the CPC Central Committee deliberated and passed Implementation Opinions on Carrying out the Principle of of Taxation by Consent, which presented the " road map" to implement the Principle, clearly put forward the reform task of implementation of the Principle, which will be strived to be completed in 2020.To implement the Principle of Taxation by Consent is the need of the rule of law. The Principle is associated with the British Constitutionalism Revolution, and develops along with the revolutionary history of the rule of law and democracy in the world, such as the French Revolution and the American Revolution. But for China, the Principle is an exotic. How to implement the Principle is a major issue to the construction of the rule of law in China. This paper studies the subject of the Principle from following areas, which is divided into 6 chapters, including the following main contents.Chapter 1 is an introduction, which elaborates mainly from following aspects: research background, research theory and practical significance; literature review at home and abroad; the main content, ideas and methods, innovation and deficiency of the study; prospects for further research and so on.Chapter 2 is about the origins of the Principle. At first, the paper studies the historic origin of the Principle, which respectively studies the establishment and the development of the Principle in the UK, the US, France and other countries. It can draw the conclusion that the social contract theory, decentralization and balance theory and the people's sovereignty theory are the thought origin of the Principle in the field of political science and law, and public choice theory, principal-agent theory and the theory of public finance are the ideological origin of the Principle in economics and finance.Chapter 3 is concerned with the basic theory of the Principle. The chapter studies the Principle mainly from the connotation, content and requirement, function, essence and value pursuit of the Principle and so on. The Principle refers to that taxation must be levied based on a " law ", and if there were no " laws ", the state should not tax people and people should not be required to pay taxes. Here the " law " must be defined by law enacted by the legislature, not including administrative rules, regulations and local regulations etc. The content of the Principle includes statutory taxes, statutory tax elements and statutory procedure. Besides, the core of the Principle is statutory tax elements, which requires that the taxpayer, tax object, tariff and tax basis, tax rates, tax incentives, tax administration and so on have to be prescribed by law. Based on the historic origin and the theory of the Principle, the paper comes to a conclusion that the essence of the Principle is the consent of people. The fundamental function of the Principle is to limit the state's power of taxation and to protect people's property right. In addition, democracy, the rule of law and human rights are the concepts and value pursuit of the Principle.Chapter 4 discusses the legislation and the reality of the Principle in China. The paper introduces the Principle in the course of establishment and development in China from two aspects of theory and legislation. Constitution in our country does not provide the Principle. At present, Tax Administration Law and Legislation Law successively have established the Principle. In the reality of our country, the Principle is facing two major problems:(1) tax legislation deviates from the Principle. In fact, tax in our country is imposed more according to " rule " and less according to "law". In addition, the legal basis of taxation is mainly administration regulation rather than law. Even more, tax legislative power in China is not primarily in the hands of the legislature, but in the hands of the executive. (2)The executive deviates from the Principle in the course of implementation of tax law. Their violation includes delegation at will, unauthorized change in tax elements, macroeconomic regulation and control and tax reform frequently breaking through the Principle, free to expand the explanation of tax law, taxation according to tax planning and many other practical problems. From the above two main problems, we finally can arrive at a conclusion that there is a practical need to implement the Principle in China.Chapter 5 is the implementation of the Principle in China. In our country, the main way to achieve implementing the Principle lays on these aspects like legislation, law enforcement, judicature and the environment of rule of law and so on. In terms of legislation, the NPC should take back tax legislative power. In the enforcement side, to restrict the executive power is the realistic path to implement the Principle. The main initiatives contain perfecting delegated regulation, macroeconomic regulation and control being bound by the Principle, tax reform being with law, being strict with the executive in interpretation of the tax law, no longer setting tasks, etc. In the administration of justice, the tax law should be taken as the legal basis, analogy should be prohibited, no suspected tax should be levied, etc. In addition to the implementation of the Principle within the scope of the system of legislation, law enforcement, judicature and other issues involving public authority, the implementation of the Principle also need the efforts and support of the whole society and all taxpayers, and need to build appropriate supporting system, measures and good environment. The efforts include putting the Principle into Constitution, changing the status of the insufficient legislative resources of the NPC, building the concept of rule of law and legal environment and so on, Furthermore, the Principle as a western exotic, there must be acclimatized and localized issues in the process of legal transplant. For this reason, how to really implement the Principle under our country's conditions, it is the major challenge faced after the Principle having been established. Based on Chinese social reality, first of all, the delegation legislation of taxation should be remained, because the Principle does not prohibit the authorization, but require the authorization to be clear and the blank blanket authorization to be prohibited. Secondly, when the NPC is not in session, to exercise the tax legislative power should be in the hands of the NPC Standing Committee. Thirdly, when there come exceptional circumstances, tax rates adjustment and tax collection should be authorized to the State Council. Moreover, the State Council shall have the right to adjust the tax rate and tax collection issues, if the circumstances put forward as follows:State of emergency; being conducive to the interests of taxpayers, such as reducing rather than aggravating the burden on taxpayers; situations stipulated by other laws.Chapter 6 is about the further development of the Principle. In China, the future of the Principle can further be improved and developped from following aspects. At first, it can complete the connotation of the Principle from two sides. One side is to expand the connotation which is conferred by Legislative Law. The newly revised Legislation Law provides statutory elements only including taxes, tax rates and tax administration. However, according to the content and requirement of the Principle, those things should be provided by "law", such as the taxpayer, tax object, tariff and tax basis, tax incentives. The other side is to expand the connotation of "law" of the Principle, which should contain the local laws and regulations. It is in line with the spirit and essence of the Principle that local tax is determined by local laws and regulations. Then, the next stage of the development of the Principle is to restrict the Power of the legislature. The Principle of Taxation by Consent requires not only setting tax by the "law", but also by the "good law". Finally, the highest stage of the Principle is public finance by consent. We should move towards public finance by consent from the Principle of Taxation by Consent, which is actually the fact of history. And then from fiscal revenue legitimacy to fiscal expenditure legitimacy, finally to public finance by consent.