Insight into the Truth of Taxation and Rights
By Zheng Yuchuan
("The Illusion of Tax: Letting Ordinary People Understand China's Tax System," edited by Huang Kaize and Cen Ke, Central China Normal University Press, January 2012 edition)
Taxation has become an issue in China mainly because a tax management power system has been constructed based on tax laws and systems, but there is no effective safeguard for taxpayers' rights. Because of this, many citizens have very weak taxpayer awareness and lack the initiative or even passive response to demand improvements in tax laws and systems, public disclosure of fiscal inflows and outflows, and supervision of government administration and official duties.
Such a statement might make officials think that continuing to let "tax" be a "power" issue rather than highlighting its "rights" essence would be beneficial to governments at all levels and departments, and at least beneficial to officials. This would be a big misunderstanding. Without the voluntary participation and rights of taxpayers, it not only reduces public supervision of the government and officials but also fundamentally makes civic consciousness, public awareness, and social responsibility remain on paper or become exclusive "luxury goods" enjoyed by certain groups (such as intellectuals).
As a result, the public cannot be nurtured into the real sense of "citizens." It is impossible for them to regard themselves as the masters of the country and society as advocated by the authorities, and it is difficult for them to consciously enhance public morality, respect public order, and cherish public goods. This explains why many Chinese individuals, when speaking as individuals, can maintain good public morality and family consciousness, protecting family harmony and community peace. However, once they are placed in fixed orders or unfamiliar situations, it becomes challenging for them to apply their "good" behavior to private morality, public order, etc. One could say that the widespread moral decay and disorder in various economic and social fields today stem from the complete loss of the public's transition from rights to responsibilities.
Therefore, to resolve the aforementioned widespread moral decay and disorder in multiple domains, as some officials and experts have pointed out, so-called saving the Chinese road to virtue must include a lesson on power + responsibility. Otherwise, merely talking about grievances will leave the audience regarding such speeches as mere storytelling or jokes.
"The Truth of Tax: Letting Ordinary People Understand China's Tax System" is a very timely and necessary knowledge普及booklet. The introduction outlines 11 key points, including: everyone is a taxpayer, the government has no unilateral authority to levy taxes or decide how tax revenues are used, taxpayers have non-infringible rights such as the right to know, supervise, and litigate, government self-review cannot eliminate corruption and waste in fiscal expenditures, etc.
What is meant by everyone being a taxpayer refers to the universality of public goods and their associated taxation in modern society. The book points out that currently, there are 19 types of taxes in our country, almost every transaction involving cash flow requires the payment of several taxes, making taxation omnipresent. If we add the uniquely Chinese administrative fees, one could say that Chinese citizens and enterprises bear a complex and relatively high tax burden.
Having many tax categories and high collection amounts is not necessarily a bad thing. The key knowledge principle emphasized in "The Truth of Tax: Letting Ordinary People Understand China's Tax System" is that "the criterion for evaluating the heaviness of the tax burden does not lie in how much tax is collected, but in how much the government spends on the public." The problem lies in the following: first, decisions regarding tax categories, types, and amounts are kept secret by the authorities; second, before tax and fee revenues are converted into fiscal funds, Chinese people have neither the right to participate nor the right to know or supervise how the government decides on allocation; third, whether the government spends money according to its own set total amount and budget indicators, and the results of implementation, are largely unknown. It is worth noting that although Guangzhou, Shenzhen, and other places have previously tried to disclose fiscal budgets to volunteers or publish departmental budgets through government websites, these attempts were soon halted.
From the three points mentioned above, two further issues arise. First, the government's tax collection and fee imposition, and even "assistance" and "mandatory donations," due to dispersed and constrained powers, appear quite arbitrary in their taxing (provincial) actions. Whether the money collected enters the national treasury (is included in fiscal management) remains unclear to me. From the annual reports published by the National Audit Office and local audit departments, despite the "external supervision" working hard, it has not effectively curbed practices such as collecting future years' taxes in advance, improperly charging fees under the guise of full tax payments, and coercing individuals or businesses to make "voluntary donations." Second, the bulk of fiscal fund allocations goes toward various operational segments of governments at all levels, especially non-"personal expenses" (official salaries and benefits, position-related expenses, etc.), leading to excessive spending in bureaucratic areas. Even if the money is spent on civil welfare, since the government's expenditure is not subject to supervision and restrictions, it suffers from various inefficiencies and wastage.
After pointing out the current flaws and harms of China's tax system, "The Truth of Tax: Letting Ordinary People Understand China's Tax System" proposes systematic improvement suggestions: First, the National People's Congress should abolish tax authorization legislation, stripping local governments and departments of their tax collection and fee imposition rights, ensuring that the government cannot set standards itself and then impose taxes; Second, reform the budget system, allowing the legislative body (NPC) sufficient authority and time to conduct comprehensive and in-depth reviews and revisions of the government's budget drafts; Third, follow international conventions and establish an independent auditing system.