Providing tax incentives to for-profit private schools is a necessary choice to maintain their market competitiveness

From the observation of the development practice of private education in China for more than 3 years, private schools as a whole have more market competitiveness than public schools. After classified management, private schools are divided into two parts. Non-profit private schools are expected to get more policy support on the basis of their original competitive advantages, and their market competitiveness should not decline. However, it is a question whether for-profit private schools can maintain their original competitiveness. Compared with non-profit private schools, for-profit private schools will be negatively affected in two aspects under the current classified management framework.

First, the financial support has declined. "the NPC Standing Committee on the revision of <: Law of the People's Republic of China on the Promotion of Private Education >: Article 7 of the Decision on Amending the Law stipulates: "People's governments at or above the county level may take measures such as purchasing services, student loans, scholarships, leasing and transferring idle state-owned assets to support private schools; Support measures such as government subsidies, fund incentives, and donation incentives can also be taken for non-profit private schools. " This means that the possibility of for-profit private schools receiving government subsidies will drop significantly in the future. This judgment was confirmed in the document Guo Fa [216] No.81 "Several Opinions of the State Council on Encouraging Social Forces to Establish Education to Promote the Healthy Development of Private Education" (hereinafter referred to as "Several Opinions") published on January 18, 217, in which Article 6 requires "to establish a differentiated policy system. The state actively encourages and strongly supports social forces to set up non-profit private schools. People's governments at all levels should improve their systems and policies and give support to non-profit private schools in terms of government subsidies, government purchase of services, fund incentives, donation incentives, land allocation, tax reduction and exemption, etc. People's governments at all levels can support for-profit private schools through government purchase of services and tax incentives according to the needs of economic and social development and public service needs. "

second, the cost of tax burden has risen. Compared with the state of non-profit organizations before the revision of the law, for-profit private schools after the revision of the law must register as enterprise legal persons with the administrative department for industry and commerce (for-profit private schools formally approved by Article 9 of the Detailed Rules for the Implementation of Classified Registration of Private Schools shall register with the administrative department for industry and commerce according to the jurisdiction prescribed by laws and regulations), and they need to pay various taxes such as value-added tax, enterprise income tax and real estate tax during the operation of the school (Notice of State Taxation Administration of The People's Republic of China of the Ministry of Finance on Education Tax Policy [24] No.39). Preliminary calculations show that if for-profit private schools pay all these taxes, compared with non-profit private schools, the cost of running schools will be greatly increased by more than 3%.

Based on the above two aspects of policy expectations, it is inevitable that the market competitiveness of for-profit private schools will decline. If for-profit private schools expect to offset the financial pressure of the aforementioned decline in government funding and rising tax costs by raising fees, then both experience and theoretical analysis of economics will draw the conclusion that the market competitiveness of for-profit private schools will decline. In order to prevent for-profit private schools from losing market competitiveness, it is necessary to provide tax incentives for for for-profit private schools.

The attribute of "government responsibility product" of education makes tax incentives have policy rationality

Compared with the policy practice of private education in China before the amendment of the law, there are no institutional conflicts and practical obstacles in providing tax incentives to for-profit private schools, and the troubles of academic circles and government functional departments lie in the lack of systematic demonstration and general explanation of the reasons for providing tax incentives for for for for-profit private schools. This is not only an important reason why it is difficult to introduce tax preferential policies for private schools that require reasonable returns for more than ten years before the amendment of the law, but also the problem that the tax preferential policies for for for-profit private schools are still vague in the Decision on Amending the Law and the State Council's Opinions.

The above explanation of providing tax preferential policies for for-profit private schools is based on the perspective of practical rationality: without tax preferential policies, the market competitiveness of for-profit private schools declines, and the decline in competitiveness leads to an increase in the risk of running private schools, which leads to a decrease in private investment, which leads to a setback in the development of private education and the failure of classified management. Therefore, it is necessary to provide preferential tax policies for for-profit private schools. However, this kind of necessity demonstration based on specific policy objectives is difficult to respond to the query on the necessity of classified management: for-profit private schools that receive tax incentives are equivalent to private schools that require reasonable returns before amending the law. Is classified management still necessary? At the same time, it is also difficult to respond to the question about the rationality of tax incentives for for-profit private schools: for-profit private schools need tax incentives because of their lack of competitiveness, so do all industries or enterprises with insufficient competitiveness need tax incentives? Therefore, to explain the rationality of tax preferential policies for for-profit private schools, we need a new analytical perspective and argumentation logic.

education has two important functions in modern society: on the one hand, education is a necessity for every member of society, and people can only survive and develop in society if they receive education, which leads to the growing demand for education in society; On the other hand, education is an important basis for competition among countries, and the competition of national strength is, to a certain extent, the competition of education. The combination of these two aspects makes education a public product that the government must guarantee in modern society. Therefore, in the pattern of the development of public education and private education, the termination of private schools means that the government needs to use more public resources to ensure the original education supply pattern. In order to describe the characteristics and functions of education in modern society more vividly and profoundly, we can call education "the product of government responsibility" to highlight the main position of the government's responsibility for education supply. With such a conceptual basis, we can immediately draw an inference: private education enables the government to better fulfill its educational responsibilities. Therefore, any private school-running behavior that provides education to the society at a lower cost than public education should be encouraged and supported by the government. This has established a reasonable basis for the government to provide preferential tax policies for for-profit private schools.