Building the tax state in China: Center and region in the politics of revenue extraction, 1994--2003.

摘要

This dissertation aims to explain the extractive capacities of central and local governments in China since 1994. The 1994 tax reforms intended to increase tax revenues, particularly those of the central government, by centralizing taxing power and introducing the tax assignment system. China also launched fee reforms in the 1990s to curb excessive fee extraction by local governments. China's tax and fee reforms have met with uneven success. First, central tax collection was initially poor but improved significantly later on. Second, local tax collection achieved only limited success. Third, fee burdens facing private entrepreneurs did not diminish over time. These are the outcomes of the tax and fee reforms that this study seeks to account for.; This study finds that centralization of taxation unintentionally aggravates the problem of local collusion; rather than submitting central taxes, local governments, central tax officials stationed at local branches, and local businesspeople split these resources among themselves. This study shows that centralization of taxation led Beijing to increasingly resort to political control over provincial party secretaries, which in turn brought about improvement of central tax collection.; This study finds that taxing capacities of local governments in China are constrained by informal tax competition, meaning the provision of preferential tax treatment outside the realm of formal rules. This study argues that local tax competition is partially driven by local leaders' political motivations, since the ability to attract investment is one criterion used to evaluate the performance of local leaders.; In conjunction with informal tax competition, illegitimate fee extraction by local governments remains an enduring problem in China. I argue that the combined effects of local competition for investment and fiscal distress of local governments has led local leaders to be "selective helping hands" to private enterprise. In order to continue to attract investment, local leaders must ensure that firms in their districts are not over-burdened by fees. At the same time, however, local leaders are desperate for revenue and may depend on the extraction of fees. Consequently, local leaders provide selective protection to large companies against state actors' exorbitant fee extraction.