What is a Tax Base?

The tax base refers to the objective basis of government taxation, and it describes the breadth of government taxation, that is, the problem of "what" taxation is addressed to whom. From the perspective of taxation practices in various countries, the objective basis of the taxation system can be divided into national income type, national consumption type, and national wealth type in a broad sense. From a neutral perspective, the tax base refers to the objective basis for taxing a certain type of tax, that is, the taxation object. It is a qualitative and quantitative description of the breadth of taxation of a certain type of tax. An important sign of tax is also the fulcrum of the government's use of tax leverage to regulate the economy. From a narrow perspective, the tax base refers to the basis for tax calculation. The legal basis and basis for calculating taxable amounts. ^[1]

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The following factors should be considered when selecting a reasonable tax base:

Changes in the distribution of tax bases and sources

The choice of tax base should be structurally compatible with the distribution of tax sources, and try to choose those taxation objects that have a wide range of tax sources and are sufficient as the dominant tax base. At the same time, in accordance with changes in tax sources, the tax base structure should be adjusted in a timely manner.

Tax base tax revenue

The tax base and tax rate are the two main factors affecting tax revenue. With the tax rate unchanged, the tax base is expanded to increase revenue; the tax base is reduced to reduce revenue.

Tax base national policy

If the tax rate remains unchanged, the wide and narrow tax base will directly affect the taxpayer's burden level. The state can guide taxpayer behaviors by reflecting tax allowances, pre-tax deductions, and pre-tax repayments, and reflect national policies.

Another more professional explanation is as follows:

The tax base is the base on which the taxable amount is calculated. Including two types of physical quantity and value. The former includes the number of acres of land, the number of houses, the number of cars and vessels, and the tonnage. The latter includes the amount of sales income of goods and the income of individuals and enterprises. The tax base is one of the basis for tax calculation. Without changing the tax rate, expanding the tax base will increase the tax amount, and reducing the tax base will reduce the tax amount. The tax base in turn restricts the specific form and use of tax rates. When the tax base is physical quantity, the tax rate is mostly a fixed tax rate. When the tax base is the amount of value, the tax rate is mostly a proportional tax rate or a progressive tax rate in the form of a percentage. If a progressive tax rate is implemented, the tax rate will continue to increase as the tax base increases. The tax base is related to the number of taxable objects, but there are also differences. The relationship between the two is that in many cases, the tax base is directly a form of expression of the number of taxable objects, such as the tax base is the amount of income when taxing goods. The difference between the two is that in some cases, the tax base is only part of the taxable object, not all of it. For example, when taxing corporate income, the amount of the taxed object is the total income, and the tax base is the balance after deducting from it. When taxing personal income, the tax base is the total amount of the income that exceeds the exemption. section.

Objective basis for tax collection. Abbreviation for tax base. Basic elements of taxation. The tax base serves as the basis for calculating the taxable amount and includes two meanings:

The quality of the tax base. The specific object of taxation. Different taxes have different tax bases. For example, the tax base of commodity turnover tax is the sales or value-added of goods, the tax base of income tax is various income, and the tax base of property tax is various property.

The amount of tax base. That is, how much of the taxable object can be used as the base for calculating the taxable amount. For a taxable object, the tax base can be wide or narrow. If there are many non-taxable items deducted from the income, the tax base will be relatively small. The tax base is the unity of quality and quantity of taxation basis.

When a country formulates a tax system, it must choose the tax base appropriately. The tax base that can be chosen changes with the changes in socio-economic development. Under the conditions of a commodity economy, the range of tax bases to choose from is relatively wide. Commodity turnover, corporate profits, personal income, investment and consumption expenditures, and even property and property transfers can all be used as tax bases. The choice of tax base is based on certain principles and needs. To ensure the steady growth of fiscal revenue, it is necessary to choose a tax base that is common and often present in the national economy. If taxation is to be used to achieve government regulation of the national economy, the scope of the choice of tax base must be relatively broad, and it must be conducive to the optimal combination of the principles of tax fairness and efficiency, and it is practically feasible.