China: Cities and counties fail to meet tax quotas; collect unauthorised taxes instead

Cangzhou, Hebei Province, China

Cangzhou, Hebei Province, China

During the last weekend of October, some staff in the taxation bureau of Xian County, Cangzhou City waived their holiday and remained in their office to try to persuade various enterprises to pay an unauthorised tax because, due to the recession, the bureau fails to fulfil this year’ tax collection quota assigned by the state.

Unauthorised taxes have been expressly banned by the state, but according to The Beijing News, local governments in some counties and cities in Cangzhou and Hengshui disregarded the ban and imposed the tax.

On October 27, some enterprise owners were called to a meeting by the responsible person of a local taxation office. The responsible person told them that as the People’s Daily had published an editorial on the Diaoyu Islands (called Senkaku Islands by Japan), according to his experience, there would be a war between China and Japan for the Islands; therefore he asked them to pay a tax to “support the state.”

Li Jianguo, an enterprise owner who attended the meeting, does not believe that there will be a war. He said, “If the state is really in difficulty, I will sell my factory to support the state, but is there any truth about the war?” He was asked to pay 70,000 to 80,000 yuan ($11,200 to $12,800) five to six times of the amount of tax he has to pay for the whole year. It is more than he can afford.

However, he has been told the amount is negotiable.

Lu Jinchong, deputy chief of Xian County Taxation Bureau, admitted that there was “great difficulty” in fulfilling the tax collection quota this year due to the recession in the property market. He alleged that he was not aware of the unauthorised tax, admitted that it was against the rules and said he would make an investigation.

It is said that Xian County has so far collected approximately 200 million yuan ($32.11 million) and has to collect over 90 million yuan ($14.45 million) more in the remaining month to fulfil the collection quota.

Lu was not clear how the quota was set, but only said that it was assigned from above and he was in charge of fulfilling it. According to local officials, when local governments draw in foreign investment every year, they see the prospects of investment in some large projects, and believe there will be increase in their tax revenue. However, in fact, quite a few enterprises are not even able to pay their taxes within a short period of time. That is why the amount collected has fallen short.

Sources: The Beijing News, Singtao Daily

Categories: Finance & Economy

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