At present, China implements a social security system that combines unified accounts, and the original intention of establishing this system is to combine fairness and efficiency. Therefore, from the beginning to the end, the individual and unit contributions of social security in China are in the form of "fees", which fully conforms to the institutional attribute of the combination of unified accounts. Changing fees into taxes will lead to many conflicts with the current system model, leading to conflicts with social and economic conditions.
the fee-to-tax system lacks "flexibility"
the fee-to-tax system does not meet the requirements of "flexibility" of the social security system. The rigidity of the tax system is greater than that of the fee system, which is a basis for the tax faction to advocate the change of fee to tax, and it is believed that this can strengthen the collection and payment. However, we should take into account another factor: our social security system is still under construction, the institutional framework of unified account has just been set up, the relationship between the overall planning part and the account part has not been straightened out, and the scale ratio is still changing. The scale of individual accounts alone is 8% in Liaoning, 5% and 6% in Jilin and Heilongjiang, and 3% in Tianjin and other eight provinces and cities this year. In addition, the reform plan of civil servants and institutions is far from conclusive; The social security system for migrant workers, landless peasants and purely agricultural peasants is still in the exploratory stage, and the system expectation is far from clear, and there is no long-term strategic thinking and conceptual design. It is completely one step at a time, and every government is the same. In this way, it is necessary to leave more room for system reform, and retaining the payment system is equivalent to retaining any uncertain reform space in the future. If the fee is changed to tax, the system will be rigid, which will add another problem to the future reform.
the problem of investment income
at present, the investment regulations of social security funds can only make bank deposits and purchase government bonds, and the rate of return is low, only about 3% on the national average, which can only offset the inflation rate, but far below the average wage growth rate of society. Such a rate of return is a severe challenge to the financial sustainability of the current social security system, a great irony to the realization of personal accounts, and the greatest threat to the legitimacy of the unified account system.
the change of fees to taxes will undoubtedly make the investment of social security funds into an embarrassing situation: the heavy responsibility of interest rate return can only be borne by the state and can only be considered and solved from the financial point of view, so what should be done with the account funds? Theoretically, the state can never allow tax revenue to be invested in the capital market for market-oriented investment. At present, it is obviously unscientific and even a waste of resources for account funds to adopt the same investment channels as overall funds; In the long run, the purpose of setting up a personal account is to improve its rate of return, so that it can implement the market-oriented investment of trust system like enterprise annuity. Otherwise, the long-term implementation of the same investment system for solid accounts will not become the integration of unified accounts? Therefore, the change of fees to taxes is tantamount to self-restraint, which sets a theoretical obstacle for the future market-oriented investment system of account funds.
The change from fee to tax exceeds the current level of social and economic development
The change from fee to tax will involve many related problems to be solved, and there are two biggest difficulties in front of us: how to define the connotation and extension of taxpayers, that is, how to define the scope and concept of taxpayers; The other is the setting of tax rate, that is, how to set tax rate. These two problems are difficult to solve after the fee is changed to tax at the current level of social and economic development.
to add a tax type or a tax item, the taxpayer must be determined first. If the fee is changed to tax, the formal sector in cities and towns can basically become social security taxpayers, but a large number of flexible employees in the informal sector are far from being covered; The participation rate of migrant workers is only 7%, and the annual income is only 9, yuan; In 26, the net income of rural residents was only 3,587 yuan, even the agricultural tax was exempted. How can we increase the tax burden of farmers? Once the fee is changed to tax, these social groups are excluded from taxpayers, which is obviously contrary to the construction of a harmonious society. This is a fool of the seriousness of tax legislation.
besides, how will the tax rate be determined? If different tax rates are set for the above-mentioned different groups, and there are nearly 4 million civil servants and institutions with separate tax rates, this will undoubtedly be the only and most fragmented social security system in the world. This is not only a typical social exclusion, but also pushes the current problems into the future. The complexity and fragmentation of the social security system will seriously affect the formation of a nationwide large market and the flow of labor.
The dilemma of fund security
The security of social security funds in China is not whether it is a "fee" or a "tax", whether there is a trinity collection and management system, or whether the left hand supervises the right hand, but there are two main dilemmas: First, the investment of funds is limited to agreement deposits and national debt, and the low return on investment leads to illegal operation, which is an open secret in many places; Second, the overall planning level is too low, the fund management is scattered, and the central government is beyond the reach, and the social security fund management presents a serious fragmentation phenomenon.
At present, the overall planning level of social security system in China is mainly based on counties and cities, and there are few provincial-level overall planning in the sense of real big income and big expenditure, even the so-called provincial-level overall planning including the three northeastern provinces has not achieved real big income and big expenditure. As early as 1991, the State Council issued the No.33 document "Decision on the Reform of the Old-age Insurance System for Enterprise Employees", which put forward that "we should actively create conditions to gradually transition from the current city and county overall planning to provincial overall planning". Sixteen years have passed, and the overall planning level has hardly moved. In these 16 years, any social security document issued by the central government and departments must mention "gradually realizing provincial overall planning", which is estimated to be as high as a dozen times, but why hasn't it been realized? Is it because the fee was not changed to tax 16 years ago? The answer, of course, is no: even if the fee is changed to tax today, it will not be able to achieve a large amount of revenue and expenditure nationwide.
there is only one key factor that determines whether provincial overall planning can be realized: whether the system design meets the requirements of the current level of economic development. As long as there is social co-ordination in system design, the dual economy will inevitably lead to insufficient payment incentives, moral hazard, adverse selection, and ultimately it is difficult to improve the level of co-ordination. Just like the team accounting in the people's commune era, if the brigade or commune is used as the accounting unit, adverse selection has already destroyed the people's commune system. Under the condition of dual economy, no matter whether the payment system or the tax system is implemented, as long as the payment is not 1% included in the personal account, it will be difficult to improve the overall planning level, and moral hazard will surely exist widely in the governments at the county, city and province levels and in everyone.
(The author is the director of Latin American Institute of China Academy of Social Sciences and a doctoral supervisor. His main research fields include: western economics, market failure, welfare state, comparison of social security systems, social security fund investment and enterprise annuity. )
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