What Is the Difference Between Income Tax, Excise Tax, and Direct Tax?

Direct tax refers to tax that cannot be passed on, but is directly borne by the taxpayer. Such as head tax, income tax, land use tax, property tax, etc. Taxation is divided into direct taxation and indirect taxation based on whether the tax burden can be passed on, but the views are not the same. Some take the taxation subject as the standard, and consider that taxpayers who are the same as tax bearers are direct taxes; otherwise they are indirect taxes. Some take the intent of the legislator as the standard and believe that any tax that the legislator expects the tax burden cannot be passed on is a direct tax; otherwise, it is an indirect tax. Some take the tax source as the standard, and consider that all taxes derived from property and production and operation are direct taxes; otherwise, they are indirect taxes. ^[1]

Direct tax

Direct taxes are levied on income and property attributable to private individuals (for private possession or ownership). Compared with the taxation of goods or services in circulation, direct taxes have outstanding advantages:

1. It is more difficult for taxpayers of direct taxes to pass on their tax burden.

2. Direct tax

Inevitably, direct taxes are also flawed:

1. The taxpayer bears a heavy direct burden, has a large collection resistance, is prone to tax evasion and evasion, and has a large tax loss;

2. The method of collection is complicated and requires a high level of accounting and management.

The existence of direct taxes is closely related to the stable development of the commodity economy.

1. Among the economically developed countries, first of all, the domestic and international markets are extensive, the transactions are frequent, and the transaction volume is huge.

China's per capita income level is still relatively low, but the income disparity among different residents in China is very large. Increasing the proportion of direct taxes is precisely to solve the problem of disparities in income related to social harmony and sustainable development. "

"In the tax system, some people have suggested that the increase in the direct tax rate is a natural process. I don't agree with it. If you think it is a natural process, then it negates the importance of tax reform."

In China's current tax system, indirect taxes with value-added tax, business tax, and consumption tax as the main body account for about 68%, and direct taxes with corporate income tax and personal income tax as the main body account for about 25%, in addition to some small taxes. In terms of proportional relations, China is a relatively obvious indirect tax system.

Although Lou Jiwei said in an interview a few days ago that China s indirect tax structure will not change and China will not abolish indirect taxes, but he also pointed out that the low proportion of direct taxes in China is a fact and that future reforms will increase the proportion of direct taxes.

Xu Sheng, deputy director of the Finance and Financial Research Office of the Economic Research Institute of the National Development and Reform Commission, explained in an interview with reporters that indirect taxes are implicit in prices and it is easier to collect them through consumption channels, which is a positive side. "However, it should be noted that as the income of residents rises, the share of consumption in their income decreases.

Taxation is an important tool for government macro-control and an important means for redistribution of social wealth. Therefore, to further improve China's tax system and improve its rationality and fairness, it is necessary to adjust the tax structure and increase the proportion of direct taxes. At present, China's overall tax burden level is roughly at the middle level of developing countries, which is in a relatively reasonable range. This has created a realistic basis for us to adjust the tax mix while maintaining a stable macro tax burden so that direct taxes will rise and indirect taxes will decline.

Specifically, first of all, we should gradually reduce the proportion of "big chunks" of indirect taxes, and reserve space for the expansion of direct taxes. At present, the tax reforms carried out nationwide, with a total tax reduction of 13.013 billion yuan in the first reporting period of the national pilot, not only effectively reduces the scale of indirect taxes, but also helps to simplify taxation and eliminate double taxation of business taxes. At the same time, we should focus on expanding the proportion of direct taxes. In China's current tax system, the three major indirect taxes with a larger share of income are value-added tax, business tax, and consumption tax. In 2012, the three major taxes accounted for 39.8%, 15.6%, and 9.0%, respectively. According to the current direction of China's economic restructuring, especially with the gradual implementation of domestic demand expansion and consumption promotion policies, the corresponding tax growth space can be expected.

While increasing the overall proportion of direct taxes, the proportion of direct tax classifications should be further adjusted. Specifically, while maintaining the central government's leading role in national finance, the provincial government should increase its share of distribution. For example, for the value-added tax, corporate and personal income tax, which are closely related to economic development, the share of the central government can be gradually increased; the larger proportion of resource tax, real estate tax, urban maintenance and construction tax, and vehicle and vessel tax are left to the provincial government Dominate. This will not only ensure that the central financial resources are guaranteed, but also reduce the local government's excessive reliance on indirect taxes, especially "land finances", enable it to invest more in public services with sufficient financial resources, and enhance the initiative of "transition methods and structural adjustments". .

Solving the problem of tax collection and management of direct taxes is the top priority. Indirect tax is easily accepted by both parties of the transaction, the source of tax is relatively stable, and collection is simpler. Direct tax collection is relatively difficult in practice. If the level of levy and management does not meet the requirements for levy, and the regulatory power is not enough, then direct taxation will not only regulate the gap between the rich and the poor, but also reverse regulation, that is, those who should pay taxes have the ability to evade taxes, be honest and trustworthy, and not evade taxes The person with the ability to pay becomes the actual bearer of the tax. Therefore, in the preparation process of relevant tax reforms, it is necessary to strengthen the construction and training of tax teams at all levels, increase tax supervision, and avoid the loss of taxes. ^[3]