A few days ago, the news that four government non-tax revenues, including income from the transfer of state-owned land use rights, will be transferred to the tax department for collection has aroused social concern. For a time, interpretations such as "Land transfer fees will withdraw from history" and "The land market and housing prices will be affected" were hotly discussed on the Internet.

On June 4 this year, the Ministry of Finance's website issued "About the transfer of four government non-tax revenues from the transfer of state-owned land use rights, special revenues from mineral resources, sea area use fees, and uninhabited island use fees to tax Notice on Issues Related to Department Collection". The "Notice" clarifies that four government non-tax revenues, including income from the transfer of state-owned land use rights, which were originally collected by the natural resources department, will all be transferred to the tax department for collection. And starting from July 2021, it will be piloted in seven places including Shanghai.

According to the timetable, areas that have not yet launched pilot collection and administration transfers will also fully implement the collection and administration transfer work from January 1, 2022.

So, why is the land transfer revenue transferred to the tax department for collection? Are there other related cases of non-tax revenue collection and management reform? Is the end of local land finance? Hot issues related to the transfer of land transfer revenue to the tax department for collection , The Paper summarizes and interprets this.

1. What is the background of the reform of the transfer of land transfer income to the tax department?

The collection and management system is centralized.

In March 2018, the Central Committee of the Communist Party of China issued the "Plan for Deepening the Reform of Party and State Institutions". Article 46 of the plan clearly states: Reform the national and local tax collection and management systems. In order to reduce collection costs, straighten out the relationship between responsibilities, improve collection and management efficiency, and provide taxpayers with more high-quality, efficient and convenient services, the provincial and sub-provincial national and local tax agencies will be merged to specifically bear the responsibility for various tax and non-tax revenues within their jurisdiction. Collection and management responsibilities.

In July 2018, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Reform Plan for the National and Local Tax Collection and Administration System", which mentioned that the non-tax revenue collection and management should be reasonably determined in accordance with the principles of convenience and efficiency. Within the scope of the transfer of responsibilities to the tax department, the non-tax income items that are retained in accordance with the law and suitable for transfer will be transferred to a batch of mature ones and gradually promoted.

Therefore, the transfer of land transfer revenue to the tax department for collection is understood by the industry as: the reform of merging national and local tax agencies in 2018 completed the centralization of the tax revenue collection and management system; the completion of non-natural resource revenue in 2019 The centralization of the collection and management system, including social insurance premiums, major state-owned water conservancy project construction funds, soil and water conservation compensation fees, and income from emission rights transfers, etc., are all uniformly collected by the tax department; Caizong [2021] No. 19 regarding the completion of land transfers in 2022 The provision that the responsibility for the collection and management of non-tax revenue from natural resources and other natural resources is transferred to the tax department is the final step in the centralization of the collection and management system.

2. Why should land transfer revenue be transferred to the tax department for collection?

Wang Yongjun, director of the Government Budget Research Center of the Central University of Finance and Economics, believes that the direct purpose is to promote the cost efficiency goal of revenue collection and management. Responsibility goals (users are responsible for land and resources management compliance and performance) and information transparency. The indirect purpose is to create conditions for rectifying land finance.

The first principle of revenue collection and management is cost efficiency, that is, collecting revenue at the lowest cost. In most cases, this principle is better met by a centralized model in which the tax administration is responsible for collection, particularly by reducing compliance and administrative costs. The tax department has great advantages in specialized division of labor and high level of capital investment in revenue collection and management.

In terms of the principle of responsibility for revenue collection and management, the centralized model also has comparative advantages. Land users are responsible to the landowner. The owner of state-owned land is the state, with the central government acting as the agent owner. When the user's use of state-owned land deviates from the goals and interests of the owner, the principle of responsibility will fail. Centralized mode allows for better control of these behavioral biases.

Centralized collection and management is conducive to information transparency. Non-tax revenue is mainly distributed among local governments at all levels, and the central government rarely knows about it, even with huge state-owned land revenue. The decentralized revenue collection and management model enables local governments to maintain one-way transparency of certain key information, that is, they are fully informed and the central government is fully unaware. The centralized model helps ensure that important information changes from one-way transparency of local governments to two-way transparency between local and central governments, and can also play a role in risk monitoring.

Indirectly, it also creates conditions for rectifying land finance. The information asymmetry advantage of local governments is potentially harmful, including disguised reduction and exemption of land transfer revenue, inaccurate accounting of land transfer cost expenditures and inflated land transfer costs, failure to pay land transfer revenue in full and on time to the state treasury, and allowing developers to delay payment Cache land transfer income, as well as conceal, falsely report and whitewash statistical data. The essence of these problems is the externalities caused by the decentralized management model.

Therefore, after non-tax revenue is transferred to the tax department, the revenue collection and management system, including land revenue, will achieve comprehensive centralization and two-way transparency of information, which will be a crucial step towards the comprehensive rectification of land finance. This is an important first step to ensure that the central government has comprehensive and real-time access to local government land financial information.

3. Are there any relevant cases regarding non-tax revenue collection and management reform?

Yes.

There are actually many reforms to the collection and management of non-tax revenue, and the reform of the right to collect land transfer fees is only one of its subdivisions.

For example, starting from January 1, 2019, various social insurance premiums such as basic pension insurance premiums, basic medical insurance premiums, unemployment insurance premiums, work-related injury insurance premiums, and maternity insurance premiums will be handed over to the tax department Uniform collection.

In addition, starting from January 1, 2021, soil and water conservation compensation fees, local reservoir immigration support funds, income from the transfer of emission rights, and relocation construction fees for air defense basements will be transferred to the tax department for collection. Relevant policies such as collection scope, collection objects, and collection standards are still implemented in accordance with current regulations.

In other words, in the past, the collection rights of some non-tax income items began to be gradually transferred from other departments to the tax department.

Some contents in the real estate field have also been included in the reform. For example, in May 2021, five departments including the State Administration of Taxation issued the "Announcement on Collection and Management Matters Concerning the Transfer of Idle Land Fees and Urban Waste Disposal Fees." The announcement clarified that starting from July 1, 2021, the land idle fees collected by the natural resources department and the urban garbage disposal fees collected by the housing and urban and rural development departments and managed according to administrative charges will be transferred to the tax department. collection.

Therefore, the reform of the Ministry of Finance’s land transfer fee collection power has given the authority to the tax department, which reflects the transformation of the functional system of national functional agencies and helps to strengthen the tax department’s unification of tax revenue and non-tax revenue. The ability to collect and unify management.

4. Land transfer revenue is transferred to the tax department for collection, ending local land finance?

Wrong.

The transfer of land transfer revenue to the tax department for collection is a manifestation of the centralization of the collection and management system.

The centralization of collection and management will not put local governments at risk of losing revenue, because it does not change the ownership and use rights of land transfer revenue that local governments are highly dependent on, nor does it change the scope, objects, and standards of collection. and deductions; the same goes for other non-tax income. In short, except for the transfer of collection and management responsibilities from local governments (natural resources departments) to the centrally managed tax authorities, all other aspects have remained unchanged.

5. Can the land transfer revenue be transferred to the tax department for collection, and can it reduce irregularities in land finance?

Yes.

The centralization of revenue collection and management and the two-way transparency of information have taken a crucial first step in comprehensively rectifying land finance.

The "land windfall" that once rolled in has induced a lot of wasteful expenditures. Many local governments invest large sums of land revenue in uses with low social returns, such as political performance projects and image projects that rarely benefit the public. Investment projects that fail or lack a minimum social rate of return not only waste huge amounts of resources, but also induce a lot of corruption and rent-seeking.

In addition, in the past, some urban local governments also experienced misappropriation, withholding, and expropriation of land transfer funds. The most typical example is that after the land transaction, some local government departments misappropriated funds at will, and the land transfer fees did not enter the national treasury according to normal procedures, causing many financial risks.

This time, the essence of the centralization of the fiscal revenue collection and management system is the centralization of collection and management powers and responsibilities, that is, the transformation from the decentralized collection and management model originally vested in local governments to the centralized collection and management model of the central government. .

As far as land transfer revenue is concerned, the centralized model is more likely to achieve the principle of responsibility for revenue collection and management, that is, requiring the actual users and managers of state-owned land to be responsible for the general interests and rejecting the abuse and misuse of land resources. Pursue narrow interests. At the same time, the centralization of the revenue collection and management system is also a clear signal of intervention, that is, relevant information is transparent in both directions, not only to local governments but also to the central government.

For many years, many important local financial information has been like a "black box" to the central government, especially information related to land finance, such as local government platforms, platform debts, local implicit debts, and real land Transfer income and its flow.

After Caizong [2021] No. 19 is fully implemented in 2022, the revenue collection and management system, including land revenue, will be fully centralized, and the central government will therefore have sufficient information capabilities to promote Comprehensive rectification of land finance.

6. What impact does the transfer of land transfer revenue to the tax department have on housing prices?

There is no direct impact.

The impact on housing prices mainly depends on two points: first, the relationship between supply and demand; second, real estate control policies. Judging from the current situation, the land supply and demand relationship is not within the control scope of this notice; and the real estate control policy has not been loosened and strict control has been maintained. Therefore, the transfer of land transfer revenue to the tax department for collection has no direct connection with housing prices.