Research On The Legal Issues Of The Local Taxation In China

Year 1994 saw a reform of fiscal and taxation system on the split of taxation enforcement authorities between the central government and the local government in our country. This reform, to some degree, has improved our local taxation system. Our local taxation income has taken a huge step towards legislation with the help of this reform, while the government’s taxation income has been increasing rapidly and continually. Thus, the macro adjustment and control of the government in economy has enhanced strongly, which plays a certain part in the continuous and healthy development of the national economy. With the quick development of market-oriented economy, the variety of local taxation has been adjusted and perfected continually while lots of aspects of local taxation system still need to be improved. Especially, under the background of promoting and implementing “Business Tax replaces Value-added Tax” nationwide, the main variety of local taxation has been left blank. In addition, local taxation policies change constantly and a considerable part of it have not been issued into law. Therefore, it is truly necessary to analyze and research our current local taxation system and find out the existing problems. By doing this, the ways of improving our local taxation system can be found and local economy will be driven further. With the guarantee of law, taxation will indeed become “What is taken from the people is used in the interests of the people”. This paper consists of four sections apart from abstract and conclusion:The first section starts with the theoretical foundation of local taxation and provides a certain image of its connation through the definition of local taxation and the reveal of its essential characteristics. After that, this paper analyzes and researches the theoretical foundation of local taxation based on the following three aspects: the actual reason of the local taxation’s existence is hierarchical government and fiscal system; the fundamental reason of the local taxation’s existence is local government’s function; the direct reason of the local taxation’s existence is the authorities separation in fiscal management system. To have a better understanding of local taxation, understanding its basic meaning is the first step. Then it would be beneficial to build and perfect local taxation theoretically.In the second section, this paper reviews and analyzes the current situation of our local taxation system. First, it briefly summarizes the accomplishments of the local taxation system. Then it pays major attention on analyzing the current existing problems of our local taxation system. The problems are as follows: First, Legislative and administrative powers of local taxation practices are over-centralized to the central authorities. Second, the legislation of current taxation starts from the bottom of the society and tax-related content in the constitution are left blank. It lacks of an overall <The Basic Law of Taxation>. Third, there are no clear boundaries and standards among different varieties of taxes. The lines among central government taxation, local taxation and sharing taxation are blurred. A certain number of local taxes have become “sharing taxes” and the lacks of major-type local taxes have affected the improvement of local taxation’s legislation process. Fourth, the pace of local taxation system’s reform is so slow that it could not keep up with the development of our economy. Thus, there will be a long way to improve and reform the local taxation system. Fifth, judicial protection system of local taxation has not been established and improved completely. So it directly causes the fundamental powerlessness of taxation law enforcement.In the third section of this paper, the author compares and contrasts local taxation systems of countries overseas. It summarizes the enlightenments which generate from the reviews and comparisons of the definitions of taxation authorities and the operation of local taxation system(including taxation legislative power etc.) in America, France and Japan. The enlightenments contain great value for us to reform, complete and improve our local taxation system.In the fourth section, this paper focuses on pursuing the direction and the way of improving our local taxation system. It first points out the restrict issues of improving local taxation system. Taxation income has to be assured continually growing both under the condition of tax functioning as a method of macro adjustment and control and under the affection of internet economy’s rapid expanding. Then, it provides solutions of improving local taxation system according to the analysis of our local taxation’s current existing problems in previous context: First, reasonably decentralize taxation legislation authority to the local government, and make sure local government makes laws and regulations according to its own pace of economy growth. Therefore it also will promote the increase of local tax income. Second, draft < The Basic Law of Taxation > and perfect local taxation system. Third, clarify the fiscal relation between the central government and local government; clearly identify the incomes which belong to the central government and local government respectively. Fourth, optimize the allocation of local taxation’s varieties, and promote the stable development of the relation between the central government and local government. Fifth, establish relatively stable taxation enforcement agencies and make sure tax departments operate according to the law so that the tax payers’ legal rights will be protected. Sixth, standardize law-enforcing acts of the local taxation authorities, and make considerable efforts to collect and manage local taxes.