A Study On The Deviation Of Enterprise Income Tax And Tax Source Under The Legal Income Tax System

The tax is one of the most important revenue resource for a local government to perform the functions about providing public products and managing public business.. It is one of the eternal themes of modern countries financial reform that the balance between powers and fiscal authority of central and local government. Because of the arrangement of tax rules, headquarters-economy, trans-regional operation, tax competition and so on, the tax revenue often deviate from the tax source, which is called “tax transfer”.Based on the classic theories such as public product, fiscal authority sharing, tax allocating vertically and horizontally, tax competition and so on, the paper introduced the development of Chinese financial reform, especially the rules about allocating tax revenue among governments. Integrating the macroscopic data and microcosmic data of Kunming, this paper demonstrated the transferring of the corporate income tax both vertically and horizontally, such as the Budget allocation rates, the tax allocation of Central enterprises, the difference of tax contribution between enterprises with different structure, the corporate income tax and the VAT of branches, the special allocating rules of building enterprises and hydraulic enterprises’ corporate income tax, and so on. Then the paper analyzed the reasons of the corporate income tax transferring, such as the difference between regional resources, the defects of tax-sharing system and the rules of tax revenue allocation, the combination of income ownership and jurisdiction, the malignant tax competition and the imperfect fiscal transfer payment. And then it is proved that the tax transferring is really harmful. For example, it restricts the public product providing and delays the Industrial upgrading of developing region, it increases the gap of economic and social development between regions, it intensifies competition between local governments, it misleads the operating decision of enterprises and makes it more difficult to collect and manage tax. So it is necessary for the government to pay attention to tax transferring. Based on generalizations of the experience of other countries such as the USA, Germany, Canada and EU, we have got the principle to limit the tax transferring. Finally, the paper gave four policy suggestions: first, divide the powers and fiscal authority of central and local government reasonably. Secondly,separate the ownership of tax revenue and jurisdiction. Thirdly, set up a system of dialog to discuss tax allocation between regions. Finally, standardize and optimize the system of fiscal transfer payment.