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2009 Assessment

China: Integrity Indicators Scorecard

China: Integrity Scorecard Report > Sub-Category: Taxes and Customs
Indicators		Score
61	In law, is there a national tax collection agency?	100
62	Is the tax collection agency effective?	75
63	In practice, are tax laws enforced uniformly and without discrimination?	50
64	In law, is there a national customs and excise agency?	100
65	Is the customs and excise agency effective?	75
66	In practice, are customs and excise laws enforced uniformly and without discrimination?	50

Indicator and sub-Indicator Details

In law, is there a national tax collection agency?

61: In law, is there a national tax collection agency?

Score:

YES

Comments:

References: State Administration of Taxation, established by the State Council of China

Is the tax collection agency effective?

62a: In practice, the tax collection agency has a professional, full-time staff.

Score:

100

Comments: This problem is similar to that of audit personnel: there are no clear criteria. Almost all tax collection agencies are claiming a shortage of staff. However, China's tax revenues are increasing by 20 percent annually, much faster than the GDP growth rate. Historically, the tax collection agency is treated as a lucrative agency and the demand for its positions is quite high. My research indicates that it has enough staff.

References: 1, "One-station service has good social impact," Hainan Tax, Aug. 27, 2009. [ LINK ]

62b: In practice, the tax agency receives regular funding.

Score:

100

Comments: All tax agencies receive regular government funding each year based on the budget, which does not change dramatically. Tax agencies generally keep a certain percentage of the total taxes collected as commissions. Thus, funding is not a major problem.

References: 1. Wang Zongbao, "An analysis of tax collection in the catering industry," He Fei Tax Bureau, Dec. 11, 2007 2. "The Exemplary Tax Agency Employee," People's Daily Internet Version, July 30, 2007

In practice, are tax laws enforced uniformly and without discrimination?

63: In practice, are tax laws enforced uniformly and without discrimination?

Score:

100

Comments: China has adopted a new tax rate, valid since January 2008. Under this rule, all investments, without regard to ownership, face the same tax rate. This is a huge improvement. However, it is possible that some local governments still give preferential treatment to FDI or local investments connected to officials. Another problem is that poor people pay the majority of total tax revenues. Finally, in rural areas, tax collection is quite arbitrary: some small businessmen who have connections with officials are able to evade taxation.

References: 1. Ma Guangyuan, 2009, "Comprehensive tax system is beneficial to social equity," Xinwen Chenbao, June 19. [ LINK ] 2. "Experts call for tax system reform," Xinhua News, Aug. 15, 2009. [ LINK ]

In law, is there a national customs and excise agency?

64: In law, is there a national customs and excise agency?

Score:

YES

Comments:

References: General Administration of Customs set by the State Council of China

Is the customs and excise agency effective?

65a: In practice, the customs and excise agency has a professional, full-time staff.

Score:

100

Comments: Overstaffing is a serious phenomenon. I don't give 100 because government agencies have too many staff that are not equal to the perfect implementation of their job. Overstaffing and low efficiency coexist.

References: Wei Wenbiao, 2008, "Curbing the overstaffing phenomenon is crucial to the proper functioning of government," Study Times, Sept. 16. [ LINK ]

65b: In practice, the customs and excise agency receives regular funding.

Score:

100

Comments: Like all other government agencies, customs receives regular funding from government, which is allocated according to the budget.

References: "Public servants' income should be more equal," Zhejiang Zaixian, April 26, 2008. [ LINK ]

In practice, are customs and excise laws enforced uniformly and without discrimination?

66: In practice, are customs and excise laws enforced uniformly and without discrimination?

Score:

100

Comments: Some businessmen bribe customs officials and pay less or no customs fees. Some traces of this are available on the web.

References: 1. "Dongguan Customs was found to be corrupt," Da Yang Wang, June 24, 2008. [ LINK ] 2. "Xishuang Banna Custom was found to be corrupt," Yunnan Xinxi Bao, Jan. 10, 2009. [ LINK ]