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Looking at Jilin from the perspective of finance and taxation: the difficulty of transformation of “white mountain black soil”

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Jilin is an important window for the country’s “Belt and Road” to open to the north, and it is also an important channel for China’s foreign trade and foreign exchanges. In 2020, the proportion of tax revenue created by foreign-invested enterprises (including Hong Kong, Macao and Taiwan) far exceeds the national average.

At the same time, Jilin is an important industrial base and commodity grain production base in my country. On the one hand, Jilin has a strong industrial foundation. In 2021, the sales volume of “FAW” vehicles will be 833,000, ranking seventh in the sales volume of domestic brand vehicles. On the other hand, Jilin relies on Changbai Mountain in the east, Songnen and Liaohe Plains in the middle, and Horqin Grassland in the west. The Songhua River, Yalu River, and Tumen River in the province flow in parallel, and are rich in land, forests, minerals, and water resources. The fertile black soil has bred the world-renowned “Golden Corn Belt” and “Golden Rice Belt”. In 2021, Jilin’s total grain output will be 40.396 million tons, ranking fifth in the country; The production volume and corn export volume rank first in the country for many years.

However, as a major industrial and grain province, Jilin failed to complete its transformation into a strong economic and agricultural province. In recent years, its economic development has gradually slowed down and its population has continued to flow out. On the one hand, although Jilin has focused on planning eight characteristic industries such as automobile manufacturing, petroleum and petrochemicals, medicine, and food in the past, it still presents an industrial structure of “one car dominates” in general. Fever'” colloquialism. In recent years, the growth rate of traditional industries such as automobile manufacturing and petrochemical industry has slowed down, which has constrained Jilin’s economy. It is urgent to promote the improvement of quality and efficiency inside and outside the industry to cope with the current situation of intensified market competition. On the other hand, although Jilin is rich in resources and products, and its grain output ranks among the top in the country, there are still problems in agricultural production such as weak value-added conversion ability and low disposable income of rural residents. In 2021, Jilin Province will achieve a regional GDP of 1.32 trillion yuan, ranking 26th in the country and third in the Northeast region, ranking lower in the country. The economic problems are reflected in the finance, which is reflected in: Jilin has a high degree of dependence on central transfer payments, a high degree of dependence on land finance, and the automobile manufacturing industry generates nearly 50% of the tax revenue of the manufacturing industry; the scale of fiscal revenue is small, the per capita is low, and the growth rate is slow , the contradiction between income and expenditure continues to deepen; the government’s debt burden is heavy, and the pressure on repaying principal and interest is increasing year by year.

Under the current background of comprehensively promoting rural revitalization and accelerating the construction of a new development pattern in my country, Jilin needs to give full play to its unique advantages, resolve deep-seated contradictions, accelerate transformation and upgrading, and achieve high-quality development on the basis of ensuring food security. Finance should take the initiative to strengthen the integration of resources, optimize the expenditure structure, and provide a strong guarantee for the province’s major strategies and major project expenditures. The first is to closely follow the high-quality development strategy of “one master and six doubles”, accelerate the construction of a modern metropolitan area in Changchun, guide and support the development of electrification, intelligence, networking and sharing of automobiles, and promote the safe, green and organic development of modern agriculture. Accelerate the growth of key industries such as petrochemicals, medicine and health, metallurgy and building materials, and equipment manufacturing. The second is that provincial governments need to strengthen their financial coordination and guarantee capabilities to ease the dual pressures faced by grassroots governments on repaying debts with interest and securing the bottom line of the “three guarantees”. Third, when necessary, the central government needs to appropriately increase coordination and support to help Jilin get out of the difficulties of transformation.

1. Overview of financial system and tax source structure in Jilin Province

According to the analysis of the financial system and tax source structure of Jilin Province according to the “China Financial Yearbook 2021” and “China Tax Yearbook 2021”, the following conclusions can be drawn:

First, from the perspective of the net contribution of the national finance, Jilin Province needs a net subsidy from the central finance, and its scale ranks in the middle of the country. Due to the relatively small population size, the central government’s tax rebates and transfer payments to Jilin are lower than Heilongjiang and Liaoning. In 2020, the central government’s tax rebates and transfer payments to Jilin will reach 248.1 billion yuan, ranking among the middle and lower reaches of the country. However, as an important commercial grain production base in my country, central transfer payments still play an important role in the balance of Jilin’s local fiscal revenue and expenditure: in terms of relative scale, central transfer payments and tax rebates are equivalent to 228.7% of the local general public budget revenue, It made up 81.6% of Jilin’s general public budget revenue and expenditure gap. The net contribution of the local government to the central government is measured by using the central tax revenue created by the locality and the central government’s expenditure-returned income received by the region. In 2020, Jilin’s net contribution to the national fiscal will be negative, and the central government needs to give a net contribution of 152.1 billion yuan. Grants, ranked 16th nationally.

Second, from the perspective of the provincial financial system, in the past due to the large gap in regional economic development in Jilin Province and the weak financial strength of some cities and counties in Jilin Province, the retention ratio at the provincial level is relatively high in Jilin Province. Region provides support. However, in order to mobilize the enthusiasm and subjective initiative of Changchun and other cities and counties, and ease the pressure of fiscal revenue and expenditure, Jilin will promote the reform of the fiscal system below the province in 2021, and the proportion of retention at the provincial level will drop significantly. Before 2021, except for enterprises in specific industries, the distribution ratios of value-added tax created by Jilin Province at the central, provincial, city and county levels will be 50%, 25%, and 25%, and corporate income tax and personal income tax will be allocated at the central, provincial, city and county levels. The distribution ratios of the two are 60%, 16%, and 24%.

In 2021, the Jilin Provincial Government issued the “Opinions on Adjusting the Financial Management System of the Province and Changchun City and other Cities and Counties”. 30% natural gas and other resource tax, 30% environmental protection tax, 50% local education surcharge) distributed to Changchun City (including Jiutai District, Shuangyang District), Gongzhuling City, Yushu City, Dehui City, Nong’an County, Meihekou City Wait for 6 cities and counties. The distribution ratio of value-added tax in the central, provincial, Changchun and other cities and counties becomes 50%, 0, 50%, and the distribution of corporate income tax and personal income tax in the central, provincial, and Changchun cities and counties all changes to 60%, 0.40%. Affected by the adjustment of the fiscal system, in 2021, the proportion of general public budget revenue at the provincial level, municipal level, district and county level and below in Jilin Province will be 12.2%, 48.1% and 39.7% respectively, and the proportion of provincial revenue will drop significantly by 13.5% compared with 2020. percent. However, it is worth noting that although the nominal size of the general public budget revenue of Changchun City itself and the counties (cities) has increased compared with the original system, in order to ensure the normal operation of the provincial finance, the increased part of the system adjustment needs to be released to the provincial level. Finance, the 2021 Changchun City financial final accounts pointed out that the adjustment did not increase the actual financial resources available at the city level and counties (cities) that year.

From the perspective of expenditure, cities and counties bear the main expenditure responsibility, and provincial governments give full play to the role of “stabilizing people’s livelihood and ensuring employment”. The expenditure is tilted towards social security, employment, education and other areas of people’s livelihood. From the perspective of expenditure levels, the general public budget expenditures at the provincial level, city level, districts and counties and below in Jilin Province in 2021 will account for 25.5%, 18.7% and 55.8% respectively. From the perspective of expenditure structure, in 2021, Jilin Province’s provincial-level social security employment, transportation, and education expenditures will account for relatively high proportions, reaching 40.4%, 12.1% and 10.5% respectively.

Third, from the perspective of industrial structure, as one of the old industrial bases, Jilin’s manufacturing industry has advantages, contributing more than 40% of the province’s tax revenue. Specifically, traditional manufacturing industries such as automobile manufacturing and petrochemical industry are still the foundation of Jilin Province. Emerging strategic industries represented by biomedicine are still in the development stage, and the transformation of new and old kinetic energy is still on the way. On the one hand, as an important grain production base, Jilin’s primary industry will account for 12.7% in 2020. However, due to the problems of short value and low industrial added value in Jilin’s agricultural product processing industry, and the fact that there are many preferential tax policies for agriculture as a whole, The tax revenue created by the primary industry accounted for only 0.1%, which limited the growth of local fiscal revenue. On the other hand, as an old industrial base of the Republic, the manufacturing industry in Jilin Province will contribute 42.9% of the province’s tax revenue in 2020, ranking third in the country, far higher than the national average of 12.0 percentage points. In the subdivision of the manufacturing industry, the tax revenue generated by the automobile manufacturing industry, petroleum coal and other fuel processing industries together accounted for 26.3% of the province, and the automobile manufacturing industry alone contributed 20.3% of the province’s tax revenue. In recent years, the transformation of Jilin’s industrial structure has accelerated, forming characteristic industries such as new energy, biomedicine, and new materials. However, emerging industries have problems such as small scale and weak foundation. For example, the tax revenue generated by the pharmaceutical manufacturing industry accounts for only 3.3%.

Fourth, in terms of tax types, Jilin’s tax revenue mainly comes from five major tax types: value-added tax, corporate income tax, consumption tax, deed tax, and personal income tax. Value-added tax is the largest tax category in Jilin. In 2020, value-added tax contributed 37.6% of Jilin’s tax revenue. Corporate income tax, consumption tax, deed tax and personal income tax accounted for 18.6%, 17.5%, 6.1% and 4.8% respectively. It is worth noting that compared with the national average, the proportion of consumption tax created by Jilin is significantly higher, 9.7 percentage points higher than the national average. However, the consumption tax is a fixed income of the central government. Although the pillar industries of Jilin Province – automobile manufacturing and petrochemical industries pay a large amount of consumption tax every year, it is difficult to directly supplement the local financial resources.

Fifth, from the perspective of micro-subject contribution, Jilin Province is an important window for my country’s opening up to the outside world. The tax contribution of foreign-invested enterprises is second only to Shanghai, ranking second in the country. Located in the geographical center of Northeast Asia, Jilin is an important window for the country’s “Belt and Road” to open to the north, and it is also an important channel for China’s foreign trade and foreign exchanges. Relying on the solid industrial foundation laid by the old industrial zone, Jilin Province has attracted a large amount of foreign investment and made important contributions to various fields of society. Foreign capital prefers the agglomeration effect of advanced manufacturing industries such as the automobile industry and the pharmaceutical industry and related industries. From the perspective of investment sources, Germany, Japan and other places are the main sources of foreign capital utilization in Jilin Province. In 2020, foreign-invested enterprises (including Hong Kong, Macao and Taiwan) in Jilin Province will generate 22% of tax revenue, ranking seventh among the 31 provinces in the country, far higher than the national average of 16.1%.

2. Jilin’s financial situation: the total financial volume is small, the per capita is low, the growth rate is slow, and the pressure on social security is relatively high; the regional differentiation in the province is obvious, and the overall situation is “one pole leads many places” pattern

First, the total fiscal revenue of Jilin Province ranks lower in the country, showing the characteristics of small total, low per capita, and slow growth. As the regional economic “growth level” fiscal revenue, Changchun, the provincial capital, takes the top spot, accounting for more than 50% of the province. In 2021, the general public budget revenue of Jilin Province will be 114.4 billion yuan, with an average growth rate of 1.2% in two years, ranking sixth from the bottom in the country in both scale and growth rate. From a per capita perspective, Jilin’s per capita general public budget revenue in 2021 is only 4,816 yuan, ranking fifth from the bottom in the country. From the perspective of prefectures and cities, under the strategy of “one main and six doubles” in Jilin Province and the strategy of making the provincial capital bigger and stronger, Changchun’s economy has risen rapidly. In 2021, its general public budget revenue will be 61.71 billion yuan, accounting for 53.9% of the province. It is 1.6 times the sum of the general public budgets of the other 8 cities. The general public budget revenue of Jilin City, the second largest city in the province, is only 9.5 billion yuan, less than 1/6 of that of Changchun. The cities in the second echelon include Tonghua, Yanbian Autonomous Prefecture of North Korea, and Songyuan. The general public budget revenue is between 5 billion and 6 billion yuan. The third echelon is composed of four cities: Baicheng, Siping, Baishan, and Liaoyuan. The general public budget revenue is distributed between 1.8 billion and 4 billion yuan. In terms of district counties, the general public budget revenues of Tonghua Meihekou City and Yanbian Yanji City were 2.58 billion yuan and 2.12 billion yuan respectively, ranking the top two in the province; the general public budget revenues of other districts and counties were all lower than 2 billion yuan, and Liaoyuan City Xi’an District ranked last, with only 50 million yuan.

Second, the overall fiscal revenue quality of Jilin Province is at the national mid-range level, and the revenue quality and sustainability need to be strengthened to be at the national mid-range level. In 2021, the tax revenue of Jilin Province will account for 70.8% of the general public budget revenue, ranking 16th among the 31 provinces in the country. In terms of cities, the financial quality of Changchun and Tonghua is higher than the average level of the city. The proportion of tax revenue in general public budget revenue is 84.3% and 75.7%, respectively. Siping City has the lowest proportion of tax revenue, only 34.2%. In terms of district counties, among the 55 districts and counties that have disclosed data, Changchun Nanguan District, Kuancheng District, and Siping Tiexi District accounted for more than 90% of tax revenue, and the fiscal quality was relatively high; while Baicheng Tongyu County, Tongyu County, Siping Shuangliao County and Songyuan Changling County accounted for less than 30% of tax revenue, and their fiscal quality was relatively poor.

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