Abstract:Modern tax laws have both fiscal functions and regulatory functions. The fiscal function aims to enrich the national finance, while the regulatory function is intended to guide social behaviors. The regulatory function exerts an influence on the market economy and citizens’ behaviors by virtue of the reaction force of the fiscal function. The two functions exhibit a complex relationship of competition; without proper adjustment, the entire tax system may suffer from functional ambiguity, structural fragmentation, and systemic disorder. The legitimacy basis of the fiscal function lies in the tax obligation imposed on citizens by the Constitution. However, the regulatory function does not possess such abstract legitimacy; instead, it must provide its own substantive justification and meet two requirements: clear provisions and definite purposes. According to the Legislation Law, if the regulatory function deviates from the basic tax system, the authorization for administration to formulate tax incentives must satisfy heightened standards of statutory taxation. Specific authorized entities and specific legislative forms are fundamental requirements of statutory taxation, while heightened standards elevate these to explicit or even prohibited authorization.

Keywords: fiscal function, tax incentives, tax obligations, basic tax system, statutory taxation

 

Author: Liu Zhixin, associate research fellow, CASS Institute of Law;

Source: 5 (2025) Studies in Law and Business.