Macroeconomic Regulation And Control Of China's Tax Revenue Of The Rule Of Law

Before the Reform and Opening-up, China was under the planned economy system, the government micro-controlled the economy through the government-to-business operation, and commanded the distribution of benefits of state-owed enterprises. Since 1978, China has launched the reform of state-owned enterprises and the reform of public finance and taxation, the government-to-business operation was replaced by means of macro-economy-control. Tax policy is an important method of macro economy control. To adopt, amend or abolish the tax law, the government could change the people's expectations of the economic interests, guide the allocation of resources, redistribute the income, and maintain balanced economic development.In China, as the supreme legislature, the NPC and its Standing Committee had adopted the Individual Income Tax Law and the Enterprise Income Tax Law. However, except the two laws adopted by the Legislature, the State Council had adopted all other tax laws in forms of administrative regulations. The Sate Council could make tax policy in almost fields of taxes in the ways of adopting, amending, abolishing those administrative regulations. In practice, the State Council also authorizes the Ministry of Finance and the Sate Administration of Taxation to make interpretation to the administrative regulation concerning taxation. So actually the MOF and the SAT also have the power to make tax policy concerning macro-economy-control. This situation leads to violation of the principle of legality and the principle of tax equity.It's a general ideal that the tax law should be adopted by the supreme legislature or the executive branch under special authorization in accordance with the principle of legality. Since most of the tax laws in China were in forms of administrative regulations but not the statute law adopted by the Legislature, the State Council, the MOF and the SAT could freely amend or abolish the most of the tax laws to make tax policy concerning macro-economy-control. The situation of tax legislation now in China violates obviously this principle.The principle of Tax Equity is also an important principle in tax law. The tax policy concerning macro-economy-control obviously aim at guiding the individual or the enterprise to make a decision which the government think that is in accordance with the macro-economy situation. So, the tax policy-maker always didn't take the taxpayers' ability to pay into consideration. They also couldn't impose equivalent taxation on the taxpayers in the same economic circumstances.In order to push the legalization of China's tax policy concerning macro-economy-control, the three following measures should be implemented:1. The power to make tax policy should be restrained by the Law. In accordance with the principle of legality and the Article 8, Article 9 of the Legislation Law of P.R.C., the power to make tax policy should be restrained to the Legislature and the State Council under special authorization.2. The National People's Congress has had a series of legislative procedures. Since the State Council also exercises the power to make tax policy in the ways of enacting, amending or repealing the administrative regulations or administrative decisions. And the tax policies obviously relate to the vital interests of the taxpayers, the procedure of making tax policies, especially the procedure of legislation hearing should be more democratic.3. In order to ensure that these two measures above mentioned being implemented, the accountability mechanisms should be set up, including the constitutional review, and political accountability system.