Wednesday, August 20, 2014

Taxes on Chinese Peasants Rebound

One of the Chinese communist party's great achievements during the last decade was to eliminate the "agricultural tax" and eliminate other taxes and fees on peasants. In an inspection of villages last fall, Chinese Ministry of Agriculture officials were alarmed to find a bevy of new fees and assessments being collected from rural residents. Officials warned local leaders to stop piling fees on farmers to prevent a revival of the "peasant burden" problem that caused widespread discontent during the 1990s. While it's easy to blame the resurgent taxes on greedy officials, it is unclear how all the new services and infrastructure mandated for the rural population are to be financed.

During October and November 2013, China's State Council sent inspection teams to 77 villages in Heilongjiang, Shandong, and Anhui Provinces to check up on the taxation of villagers. They interviewed peasants and inspected accounts. On August 13, 2014 MOA issued a document reporting on the problems and reminded local officials that eliminating financial burdens on peasants is the communist party's rural governance strategy.

While the teams found that rural officials had done a lot to reduce financial burdens on their subjects and most peasants were satisfied, they also uncovered a lot of fees and assessments on villagers.

Some problems uncovered:

In some rural schools in Shandong, students are charged fees for school supplies and services of 100 yuan without issuing a receipt.

Some peasants are assessed with surcharges for electricity generation projects that are double usual electricity rates for home use.

In some areas, women of child-bearing age are charged 500 yuan for insertion of IUDs and village clinics are assessed fines of 1000-1500 yuan by county health authorities.

Some families find that an 8.94 yuan service charge is deducted by the postal savings bank from their 50-yuan award for having a single child.

In Shandong, some village authorities demand a 5000-yuan deposit from villagers building a new house.

In Shandong, village organizations and farmer cooperatives are charged fees for "statistical information advisory services" (2000 yuan) and fees for "training in safe production" (200 yuan). Some Shandong villages spent 3000 yuan to send officials to track down migrants and ensure they are following family planning regulations.

In Heilongjiang, village organizations are charged 500 yuan for a librarian training fee and a 190-yuan fee for making an official village rubber stamp. Some Heilongjiang villages spent over 40,000 yuan on enumerators for the population census, and some spent 5800 yuan on plaques and signboards for family planning.

In Anhui, some villages are charged a 720 yuan fee to send university graduates serving as village officials to the provincial communist party school for training. A security project in Anhui charges villages 10 yuan per family for an insurance premium, 26 yuan for personnel costs, and a 2000 yuan contribution from the village. Some Anhui villages spent 2000 yuan on a cook for the primary school.

Unaccountable officials are inclined to increase taxes to enrich themselves and make themselves look good. Villagers have little influence over their leaders, so central officials have to keep checking up on millions of low-level officials.

Yet, village officials are also in a tight spot. Central officials mandate improvements in services and endless programs for farmers and villages like cooperatives, schools, clinics, electric grids, and road for a poor, widely dispersed population. The costs per head are often high, and the mandates often come without funding. Who will pay for more services and infrastructure?

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