An Empirical Analysis On The Tax Burden Of China’s Banking Industry

As China’s market economic system continuously improved, the banking industry began to play more and more important part. However, the banking of our country started late and the market situation and policy environment is very complex, which generates a gap between the speed of development and market demand in the banking industry. And the reform of tax is the key means to adjust the gap. For the banks, the tax burden will directly affect the level of bank income and indirectly to the banking industry management, performance estimation and risk control ability. Considering the profound effects of Taxation on the development of banking in China, this paper takes the tax burden of banking as the starting, deeply analyses China’s current tax system of the bank, judges whether the tax burden is reasonable to the development of the banking industry, and provides some suggestions.Specifically, the first part of this paper is to review the previous academic achievements in two aspects, the first aspect is reviewed on the banking tax burden level, this part is divided into three main points:the first point is the judge on current tax burden of banks, results show that most scholars think that the current tax burden for the banks is too weight, while only individual scholars hold the opposite opinion; second is the cause of formation of tax burden on bank industry, and third is the summary of the scholars suggestions about reducing banking tax, including the direct reduction of tax burden of bank industry, simplify tax perfect tax system, tax cuts. The second aspect is the research methods of previous studies, in the judgment of tax burden of banking industry, and countermeasures, research methods of the scholars used are multiple.Based on the literature, the second part of this paper is to analyze the development of China’s banking industry and the theory of tax policy, this part is divided into three main points:the first is summarizing the current taxation of the banking of our country; second is the relationship of tax policy and the banking industry analysis; third is mainly analyzing the concrete impact of tax policy on the banking development, including the effects of tax burden on bank savings deposit, the scale and level of profitability, the international competitiveness and risk status.The theoretical analysis shows that, effects of bank tax on all aspects of banking development is very significant, so the third part of this paper is empirical analysis on the tax burden of China’s banking industry, considering all aspects of the tax on bank credit scale of development, the main business income and profit level, the part of the empirical analysis is divided into the three section, respectively corresponding effect of bank tax effects on the above three aspects. The results show that compared with the influence of income tax, business tax on the three aspects is more obvious. In particular, the business tax increased1%, the size of bank credit increased0.82%, the main business income increased by0.72%, net profit is compressed by0.82%. The growth of the size of bank credit and the main business income are lower than the growth of the business tax, and business tax increase directly compressed bank profit level. So the twist effect of business tax on bank development is obvious. The model also proves, effect of income tax on the three aspects above is not significant.In order to further verify the rationality of tax burden of bank industry, the fourth part of this article will compare the tax burden between bank and other industry or other country. This part is divided into two, the first is comparing the burden of our banking industry and other domestic service industry, results show that the tax burden of banking industry is higher than most of the service industry in China; the second is comparing the burden of China’s banking and foreign banking, results also show that many developed countries have no bank business tax, while China has and the tax rate is the highest. So tax burden of our banking too high, which is not conducive to the fair competition.The fifth part of this paper is the tax policy suggestions to promote the development of China’s banking industry, this part is based on the literature review, theoretical analysis, empirical analysis and comparative analysis, which giving five suggestions to promote development of banking:lower business tax rates and the tax base; collect value-added tax; reform and perfect the banking system of income tax; adjust the tax structure and strengthen the tax preference on banking innovation service.