Readers for Cadres on Financial Knowledge: Taxation Chapter

Author: Editor-in-Chief: Gao Qiang
Publisher:
Publishing Date: 1999-09-01
Features:
Passage: "The economic basis of a society is not something other than the economic base, but the economic base itself." "The economic embodiment of the state's existence is taxation." Lenin also said, "What is taxation? It is the means by which the state takes something from its residents without paying any compensation." According to Marxist theory, taxation can be defined as follows: First, taxation is directly linked to the existence of the state, serving as the material foundation for the state apparatus to exist and fulfill its functions; second, taxation is a distributive category, representing a means by which the state participates in and regulates the distribution of national income, and is the primary form of state revenue; third, during the tax collection process, a special distributive relationship is formed, centered on the state, and thus the nature of taxation depends on the nature of the socio-economic system and the state. Taxation has long been a sensitive issue in Western economics. The basic attitude of Western scholars is to avoid addressing the essence of taxation. While definitions of taxation vary, differing in expression, they generally synthesize the arguments of predecessors, with mutual supplementation and revisions. It is generally believed that taxation is a non-punitive, compulsory transfer of resources from the private sector to the public sector, undertaken by the state to achieve socio-economic goals according to predetermined standards. Contemporary bourgeois tax theory focuses on the principles and functions of taxation. However, its theoretical foundations can still be traced back to the doctrines of Adam Smith and his contemporaries. For example, the two major tax principles—the principle of benefit and the principle of ability to pay—can be traced back to the 17th century. The principle of benefit originates from the social contract theories of Locke and Hume, while it was developed by utilitarian figures like Bentham in their "greatest happiness principle." The principle of ability to pay emerged in Adam Smith's works. If taxation is examined from the perspective of the state's role in participating in and intervening in the distribution of national income, it cannot be equated to a specific monetary income or physical goods, but rather the levying of taxes on such income or goods. For a considerable period after the emergence of taxation, its primary function was to raise revenue for the state treasury. However, with the expansion of the market economy and state functions, taxation has increasingly played a prominent role as a tool for state intervention or regulation of economic activities. Particularly after the advent of modern large-scale production, the economic regulatory function of taxation has been further strengthened, making it an indispensable economic means in the state's macro-control system. If taxation is examined as a distributive relationship centered on the state, then taxation is an economic activity, a process. In this economic activity or process, the state, as the collector, forms a special economic relationship with enterprises and individuals, as the contributors. This relationship consists of two levels of content: First, the relationship between collection and payment, which is manifested in certain tax laws, with the trajectory of its movement being the state collecting taxes legally and enterprises and individuals paying taxes legally; second, the distributive relationship, where the state, relying on its political power, forcibly and without compensation appropriates a portion of the surplus product created by enterprises and individuals, and distributes it in the interest of the class or group represented by the state. Postscript: This book was edited under the leadership of Gao Qiang, Vice Minister of the Ministry of Finance, with the participation of all colleagues from the Tax Policy and Tariff Department of the Ministry of Finance. Renowned domestic tax experts and scholars, such as Gao Peiyong, Xu Jianguo, Sun Gang, and Ji Jinbiao, provided meticulous guidance for the book's compilation. Colleagues such as Xie Xuezhi, Zhang Baozhu, Zhao Jie, Zhu Zhenmin, Du Heng, Wang Jianfan, and Wang Gang participated in the overall editing of the book. During the writing process, the book referenced many works and other documents on taxation by domestic scholars, and thanks are extended to all of them in this regard. Due to the limited level of the authors and the urgency of time, this book is bound to have certain shortcomings and deficiencies. We sincerely invite the readers to criticize and correct them. Editors, August 20, 1999