Summary of Key Points
In recent years, China's macro tax burden (simply put, the proportion of taxes as a percentage of GDP) has been declining. However, in 2025, this downward trend finally came to an end, and in the first half of 2026, the growth rate of taxes even exceeded that of the economy, indicating that the tax burden may begin to rise gradually. The reasons behind this include the recovery of industrial product prices, a more active stock market, the tightening of tax incentive policies, and enhanced taxation management for new business models. At the policy level, there has been a shift from focusing on "reducing the tax burden" to maintaining it at a "reasonable level." Experts believe that the current tax burden is too low and will increase slightly in the future, but it is necessary to balance the burden on businesses with the need for public services.
I. The Macro Tax Burden Stops Declining: From "Continuous Drop" to "Stabilizing"
From 2015 to 2025, China's macro tax burden decreased from approximately 18.45% (12.85% + 5.6%) to 12.85%, a decrease of 5.6 percentage points. In 2025 and 2024, the tax burden remained unchanged, and in the first half of 2026, the growth rate of taxes (5.3%) exceeded the economic growth rate (4.7%), showing that the tax burden is no longer decreasing. Politically, in 2021, the central government changed its focus from "reducing the macro tax burden" to "stabilizing it," and the 14th Five-Year Plan clearly states the goal of maintaining a "reasonable level"—which essentially sets a lower limit for further reductions.
II. Prices and the Stock Market: Two Key Drivers of Tax Growth
1. Recovery of Industrial Product Prices: Taxes are calculated based on current prices (for example, if you sell something for 100 yuan, the tax is levied on that amount). In the first half of this year, the Producer Price Index (PPI) for industrial products rose by 1.5%, and in June, it even increased by 4.1%. As businesses earned more from selling their goods, their tax payments also increased. For instance, VAT revenue grew by 6% in the first half of the year, which is related to the rise in PPI.
2. The Active Stock Market Boosts Tax Revenue: After policy incentives were introduced in September 2024, trading activity increased, leading to higher securities stamp duties and individual income taxes (especially on capital gains). In the first half of this year, individual income taxes rose by 13.1%, with capital gains such as stock transfers and dividends accounting for nearly 50% of the increase—for example, taxes on the transfer of restricted shares increased by 97.6%.
III. Clearing Tax Incentives: "Phasing Out" Policies to Recoup Lost Revenue
Large-scale tax cuts and fee reductions were previously a significant reason for the decline in the tax burden, but now there is a shift away from such measures, with an emphasis on reviewing and tightening existing incentives:
- Value-Added Tax (VAT): With the implementation of the VAT law, more than 80 incentive policies were standardized, reducing loopholes that allowed companies to pay less in taxes.
- Automobile-related Taxes: The purchase tax for new energy vehicles was reduced from being exempt to being halved, and vehicle purchase taxes increased by 13.7% in the first half of the year. Starting next year, some incentives for new energy vehicles will be eliminated, and certain battery consumption taxes will also be phased out, all of which will increase tax revenue.
Experts say that there are too many tax incentives currently, some of which do not align with tax principles. Clearing these policies will not only increase revenue but also make the market more fair.
IV. Taxation Management for New Business Models: Closing Loopholes for Tax Evasion Online
The new economy (such as live streaming and e-commerce) has grown rapidly, but previously, tax authorities had difficulty accessing information about online merchants, resulting in lower tax burdens for them compared to offline businesses. Last year, the State Council required platforms to report merchant identities and income details, which had a significant impact:
- Nearly 9,700 platforms reported this information, and the number of platform-based merchants paying taxes increased by 37% in the first quarter of this year, narrowing the tax gap between online and offline businesses.
- Tax authorities have also intensified their efforts to collect taxes, recovering 180.6 billion yuan (a 20.8% increase) and urging companies with overseas income to pay additional taxes amounting to 34 billion yuan—these actions have helped recoup previously lost tax revenue.
V. What Will Happen to the Tax Burden in the Future? "Reasonableness" Is Key
Experts believe that the tax burden is not necessarily the lower the better: too low a burden leaves the government with insufficient funds for public services (such as road construction, education, and healthcare), while too high a burden places excessive pressure on businesses and individuals. The current tax burden is significantly low and will increase slightly in the future, but adjustments will need to be made dynamically:
- Tax increases should not be uniform; instead, the tax system should be optimized to ensure that higher-income groups pay more taxes, while lower-income groups pay less.
- The government also needs to leverage its existing assets (such as idle land and state-owned enterprise equity) to increase revenue, thereby stabilizing the tax burden without increasing the burden on ordinary citizens and small and medium-sized enterprises.
In summary, the tax burden is expected to gradually return to a level that ensures adequate public services without placing too much pressure on individuals and businesses. This analysis explains complex economic data and policies in language that non-professionals can easily understand, covering the reasons for the stabilization of the tax burden, policy changes, and future trends.