Social Sciences in China (Chinese Edition)

No. 3, 2023

From Structural Imbalance to Structural Optimization: A Theoretical Analysis of the Establishment of a Modern Taxation System

(Abstract)

Gao Peiyong

The goal of establishing a genuinely modern taxation system is to unify the modern taxation system and the functions supported by it. The shortcomings and weaknesses in the functions of our current taxation system lies behind its structural imbalance. The core or soul for establishing a modern taxation system is to establish a system that “optimizes resource allocation, maintains market unity and facilitates social equity and long-term national stability” by taking the functions of modern taxation as the standard to optimize the structure. The transition from structural imbalance to structural optimization constitutes the fundamental path towards it. Under the precondition of keeping the macro-tax burden at a basically stable level, overcoming the shortcomings and weaknesses of our current taxation functions means that we should resolve the problems in our direct taxes, which are absent or weak. Increasing direct taxes and their proportion in the total taxes implies increasing taxes paid by individual residents and their share in the total tax revenue. This is the most important and central factor in the structural optimization of our taxation system.