Tax Policy To Promote The Development Of Philanthropy In China

The level of charity reflects the degree to which of a society development, which western developed countries generally have higher improved social charity system. During recent years, with the development of our social economy, charity has caught common concern in the various circles of the society. At the Fourth Plenary Session of the Fourteenth Central Committee of the CPC in 2004, having laid down a new goal which is to set up a social security system which combines the social insurance system, the social relief system, the social welfare system and the philanthropy, with philanthropy as an important component to perfect the social security system. In the experience gained in other countries, the government plays a major role in promoting the development of philanthropy. In the countries which have higher charity, including the United States, Britain, the governments give forceful policy support to promote charity. Tax incentive as economic means plays a significant role in supporting the development of charity. Tax policy as an indirect financial support is milder than direct financial support to avoid the government having positive governing and intervening over the charitable organization and the charity engagements, simultaneously, it is propitious to lead and stimulate the development of charity by itself.In china, philanthropy is far from developed countries. The amount of charitable donations is little, the number of charitable organizations is small, and the awareness of charity is underdevelopment. The development of philanthropy depends on the residents and the government. The tools which the government promotes philanthropy consist of law, fiscal policies and tax policies, from the practice of various countries, tax policies on the development of philanthropy has positive effect. Tax policies which can bring more social resources are very useful for the development of philanthropy. However, our current tax policies have been lagging behind the need for the further development of philanthropy. The study on the tax policies which promote philanthropy are mainly in the papers which consider the domestic philanthropy or the introduction of foreign Non-Profit Organization (NPO). In this paper, through the analysis between the amount of charitable donations per person in each province and taxation per person, I found that tax policies on the development of philanthropy in china is less effective. By comparing with the tax policies of United States, England and Germany horizontally, I found there are deficiencies, such as the management of charitable organizations which be provided with tax-exempt status, the tax exemption for charitable donations, the tax collection, the lack of some types of tax and so on. Based on the above, I put forward five policy recommendations:reform the system which provide the charitable organizations with tax-exempt status, raise the rate which Individuals and companies can deduct from their Income tax, impose the estate tax and gift tax in right time and so on.