Research On The Comprehensive Tax Effect Of Tax Deferred Pension In China

The implementing taxing system of commercial tax deferred pension insurance in China is TTE mode,which tax is imposed in the process of collection and accumulation.Recently,a new taxing system of the insurance,called EET mode is about to be tested,which will bound to cause massive influence to government,especially to the local,by forming fiscal budget constraints.Besides,under the circumstance that tax is divided and shared by both local and central government in different percentage,the actual effects are also different.Due to the government's important role in the reform,analyzing the taxing effect of the test is a necessity.Normally,the changing from TTE to EET mode will cause contemporary tax deduction to government.However,EET mode is essentially a defer in tax base,which will probably increase taxing income to government in the future by raising individual's disposal income.These two opposite effects together form a comprehensive result.In this case,this article uses some innovative models and methods to analyze the total taxing effects,based on statistic data in Shanghai.The research finds that in long term,to government,the future tax increase will overwhelm the contemporary tax deduction.Moreover,the tax benefit will be greater as long as more contemporary tax deduction exists.Thus,solely considering the optimal tax benefit,EEE mode would be the best choice to government.Meanwhile,short term cost should also be adequately estimated.On the other hand,the deferred tax arrangement only cause limited impact on stimulating individual endowment insurance,due to the lack of elasticity in personal budget constraint.Therefore,the reform probably will not reach the initial target.Based on the analysis,we suggest that in order to expand the covering and replacement rate of supplementary pension,a reform to taxing system is predetermined.In reality,more concentration should be focused on occupational pension.To sum up,the reform plan of individual tax deferred pension insurance need to be suitable with macro economic status,which is a step by step process.