The following is from last week’s Economist. I thought it interesting because I have always thought that if the middle classes in China object to CCP rule, it will be over things related to money and luxuries – tax is therefore a key issue.
The well-to-do in China have snubbed their government. This year for the first time, anyone earning more than 120,000 yuan ($15,500) annually is supposed to file a personal income-tax return. Yet by the deadline of April 2nd (extended by a couple of days because of low compliance), only a small minority had done so. Threats of massive fines have gone unheeded.
The problem facing the Chinese government is that they need to get more revenue from people that avoid paying full tax on their earnings, especially given the population will continue to age and more pressure will be created for them to be cared for (their children are already becoming less willing to look after them personally). The abolition of the agricultural tax and other initiatives to try to “pay off” the rural poor has also led to increased pressure on government budgets.
However, as the Economist points out, a lot of Chinese will ask why they should pay all their taxes when they get little or nothing in return from the State – they can’t even elect it.
But very few bother to pay personal income tax unless it is deducted automatically. As some Chinese newspapers have pointed out, this is partly because many Chinese believe they get little in return for their taxes. They have to pay through the nose for health care and for decent education for their children. They are also resentful that few officials pay tax, even though many have big incomes from shady dealings.
Even the words â€œno taxation without representationâ€ have found their way into print, in an article in the Information Times, a government-owned newspaper in the southern city of Guangzhou. Noting that half of the delegates to China’s legislature were officials, the newspaper reported that commentators had pointed out that the parliament should have â€œfewer officials and more taxpayersâ€: an interesting distinction suggesting the taxman has struck a raw nerve.
“No taxation without representation” – is that a phrase that could be heard more and more in the future in China?
Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.