Liyanping, deputy to the National People's Congress and chairman of Jinhou Shield Group
Proposal to include manufacturing labour costs in VAT deductions
Current Situation and Problems of VAT in China
VAT is a kind of turnover tax levied on the basis of the value added generated by goods(including taxable services) in the process of circulation. From the principle of taxation, value-added tax is a kind of turnover tax levied on the new value of multiple links in commodity production, circulation, labor services, and services, or the added value of commodities.
Calculation method: VAT = output × tax rate-input × tax rate = output tax amount-income tax(deduction) tax. Incoming credit is implemented: invoice credit, up and down.
China began to implement VAT in the 1990s. After so many years of continuous reform, a relatively complete chain of deductions has been established. In addition to labor costs, other input costs of the company have basically been included in the scope of VAT collection and deduction, but the manual part has not been included in the deduction item, but in the value-added tax basis.
The result of the current VAT calculation is: VAT =(labor cost + profit) × 13 % value-added tax rate.
This raises the following questions:
The tax design of VAT should be originally a tax levied on the value-added part. The labor cost is input, cost, not mark-up and profit, and should not be the object of taxation of VAT.
2, violated the principle that "taxes are not levied again." Artificial wages are the object of taxation of personal income tax, profits are the object of taxation of enterprise income tax, and both value-added tax and income tax are levied on wages and profits.
3, increased the tax burden
VAT originally only taxed the value-added part, and the addition of artificial parts directly led to an increase in taxation, resulting in excessive burdens on enterprises, especially labor-intensive and equipment manufacturing enterprises, with labor costs accounting for a large proportion.
4, to encourage the sale of resources, rough processing, and non-processing in disguised form, limit fine processing, deep processing, and especially limit the precision production of advanced craftsmen. The more processed ingredients, the finer, the higher the labor cost, and the more VAT is paid.
Enterprises are not encouraged to create employment opportunities for society. Companies can use robots to deduct, and the more people they use, the more taxes they pay. It is bound to cause more and more unemployed people to come to society and become a social destabilizing factor.
The labor cost of equipment manufacturing industry is a necessary labor, is a component of the price, is a cost recovered in the form of sales prices, and is not the result of investor investment. The equipment manufacturing industry has invested in raw materials, produced finished products, and the fundamental attributes of products have changed. In short, bread producers have invested in wheat, not wheat. It is the value added after "wheat + artificial + grinding + steaming equipment + water + electricity". Value-added tax should be calculated by deducting raw materials, water, electricity, equipment, and manpower. There is a fundamental difference between manufacturing and circulation. Artificial expenditure is the difference between cost and cost. Wheat harvesting and selling wheat only need to offset transportation costs.
In the light of the above, it is recommended that:
The manufacturing labor cost is included in the VAT deduction. The path is as follows:
1, can be implemented step by step, the "five risks and one gold" of the manufacturing line workers will be included in the deduction item,(except management personnel can be excluded). At present, the enterprise "five risks and one gold" has been included in the scope of tax administration, easy to obtain evidence, easy to operate, can be achieved.
2, reduce the VAT tax rate, increase or strengthen the income tax rate. Reducing the VAT tax rate, first promoting corporate profits, and paying income tax after profits, is in line with the tax form of most international countries. High value added tax and low profit due to high labor cost have an effective adjustment effect.