1
Study on Tax Policies for the Development of
Ethnic Minority Regions in China
ZHANG Dongmei1
ABSTRACT
The preferential tax policies have been provided to ethnic minority regions (EMRs)2 since
People's Republic of China was founded. However, the economic development gap is still
significant between EMRs and other regions in China. The tax policies for the
development of EMRs are studied in this paper, including evolution, assessment, analysis
and outlook. In fact, it is difficult to get contribution rate of the tax policies to economic
development in EMRs with integrity and complexity. The current tax law and system
definitively impact on the tax policy effect. Against the backdrop of supply-side fiscal
reform, reform toward fair tax system is a more critical contributor than tax reduction to
supporting EMRs development, and protecting local right to tax revenues with laws and
regulations is more important than preferential tax treatment. In order to further narrow the
development gap between EMRs and other regions, preferential tax policies of lower tax
rate (and tax reduction and exemption) should continue to exist in the short and
mid-to-long run.
1. Research Questions and Literature Review
1.1 Research questions
Since the founding the P. R. China, various public policies have been formulated
by the central government to support the development of ethnic minority regions
(EMRs). One of the most important policies is tax policy, in particular preferential
tax policy. China’s fiscal reform has gone through three stages—the centralized
administration system 3 (tongshou tongzhi), the fiscal contracting system 4
(baoganzhi) and the tax assignment system 5 (fenshuizhi). As the reform
proceeded, tax policies to support EMRs development have also been adjusted
accordingly. Current tax policies to support the economic and social development
1 Professor, Economic School in Minzu University of China, Beijing, 100081, [email protected].
2 Ethnic minority autonomous refer to the areas of 5 ethnic minority autonomous regions,
30 ethnic minority autonomous prefectures, and 120 ethnic minority autonomous counties(Qi). Ethnic minority regions (EMRs) in this paper refer to 5 ethnic minority autonomous regions. 3 A highly centralized system, the central government was responsible for all the tax
collection and expenditure. 4 The system required each level of governments to contract with its subordinate level to
meet certain revenue and expenditure targets. 5 The system specifies how tax revenue is shared between central and local governments,
and that is system of tax distribution.
2
of EMRs mainly focus on two areas—the first is to support industrial
development from a market-oriented perspective by means of tax reduction and
exemptions to lower tax burdens, and the second is for the local government to
provide differentiated public goods compatible with the demands of EMRs by
accelerating resource tax reform based on local comparative advantages so as to
increase local tax revenues of EMRs. Of course, central government’s financial
transfer payment to sub-national governments is a straightforward and effective
way to realize equalization of basic public services. However in the long run, it is
important to strengthen the fiscal robustness of EMRs for them to pursue
self-sustained development and to improve public services provided by
governments of EMRs. Since 2015, China has focused on promoting supply-side
structural reform. Against the backdrop of fiscal reform with tax reduction as the
pivot, it is important to think about how central government’s tax policies should
be adjusted to support EMRs development. How effective are those policies?
Should the aim of the tax policies be redefined? To answer these questions, it is
necessary to sort out the tax policies aimed at supporting EMRs development
and conduct quantitative assessment and in-depth analysis of these policies.
Moreover, it is imperative to think about how to maximize the positive impact of
tax policies on EMRs development from the perspective of taxation system, tax
law and political system.
1.2 Brief review on literature
Overseas literature dedicated to studying on tax policies that support regional
development is extremely rare, and most of the time tax policies are formulated
in consistency with industrial policies or trade policies to realize development
goals. What is abundant is literature discussing the compatibility between tax
policies and development policies (Oxfam, 2000; P. Hoebink, 2001, 2004; L.
McLean Hilker, 2004; Maastricht, 2007). Taxation has both positive and negative
impact on economy, and therefore tax policy has great potential in influencing
economic development. Since it is very common for developing countries to
struggle with pressure regarding fiscal revenue and tax collection efficiency, the
coupling between tax policy implementation and development goals is worth
further in-depth studies (Francis Weyzig and Michiel Van Dijk, 2009; Satya P. Das,
2012).
In contrast, there is plenty of domestic literature on tax policies related to
regional development and some of it is aimed exclusively at studying preferential
tax policies for EMRs (D. M. ZHANG, 2007; J. J. LI et al, 2009, 2011; Y. Y. PIAO,
2011; T. HUANG, 2011; Y. J. QIAO et al, 2015; W. B. TANG, 2016; L. ZHANG et al,
2016). These papers have reached a basic consensus on the important role of
preferential tax policies in strengthening support to EMRs development and have
proposed innovative tax policies, legislative measures, etc. However, to fix the
deep-rooted problems regarding tax policies supporting EMRs development, it is
far from suffice to simply rely on the improvement of policies and rules on tax
3
collection and administration. In fact, solutions should be found in taxation
system and tax laws to address issues related to distribution of local tax revenues
and to define roles of EMRs in industry growth, so as to promote the rapid and
sound development of EMRs.
2. Evolution of Tax Policies Supporting EMRs Development
Consistent with the history of China’s fiscal reform, the current paper divides the
evolution of tax policies supporting EMRs development into three stages: 1) the
period between 1949 and early years of reform and opening up; 2) the period
after reform and opening up and before the initiation of tax assignment system;
and 3) the period from the start of tax assignment reform till now.
2.1 From 1949 to 1979: Centralized fiscal administration
During this period, the country implemented a highly centralized mechanism of
planned economy, and accordingly the fiscal system was featured with power
centralization. To mitigate the concerns of ethnic minorities toward the new
governments at various levels, the central government adopted a series of tax
policies aimed at supporting EMRs development, as shown in Table 1.
Table 1 Major Tax Policies Supporting EMRs Development (1949-1979)
1950
To roll out centralized fiscal administration across the country
while allowing EMRs to implement the policy with certain degree
of autonomy and some regions to have autonomous tax
administration,.
1951
The Government Administrative Council gradually approved
border trade, allowing China’s border regions to trade with
countries such as North Korea, Russia, Mongolia, Pakistan,
Myanmar and Vietnam. The exchange of local goods by residents
living at border areas (mainly ethnic minorities) for daily
necessities was either exempt from tax or enjoyed lower tax rate.
1953-1
957
To restore agricultural production of EMRs, the central
government adopted a low tax policy for agricultural areas where
tax was calculated based on prescribed rate, certain tax was
reduced or exempted in accordance with law and tax burden
remained the same for increased production output.
Impoverished agricultural areas followed a policy of “less tax
reduction for areas stricken by mild disasters, more for those
stricken by heavy disasters, and all tax exempted for areas
suffering from catastrophic disasters”. Moreover, taxes for
agriculture and husbandry were all exempted, and pasture areas
enjoyed more favorable tax policies than agricultural areas and
cities. There were also policies on ethnic minority products to
4
ensure the production and supply of industrial goods with strong
ethnic minority and regional features, multiple specifications,
complex techniques and small production volumes, so as to meet
certain special demands of ethnic minority residents. Such
policies covered planned supply of earmarked raw material,
favorable prices and tax reduction and exemption.
1958-1
962
A number of mainstay machinery manufacturing enterprises were
relocated by the government to the north-western and
south-western EMRs, and initiated many key projects in Inner
Mongolia, Xinjiang, Gansu, Ningxia and other EMRs. These projects
covered the production of steel and nonferrous metal,
construction of large hydro-power infrastructure and construction
of production bases of energy such as coal. Accordingly, tax
policies were formulated to support industrial development of
those EMRs.
1963
Ministry of Commerce and Ministry of Finance released the Joint
Notice on Three Preferential Treatment Measures for Ethnic
Trading Enterprises in Remote Mountain Areas and Remote Pasture
Areas, which specified that 17 counties of Guangxi, 31 Counties of
Yunnan, 45 Counties of Sichuan, 22 Counties of Guizhou, 31
Counties of Qinghai and 13 Counties of Gansu could enjoy
favorable treatment. All of the three measures included in them
preferential tax policies and offered multiple favorable policies on
the production and supply of goods for EMRs, for example
preferential policy on supply of daily necessities of ethnic minority
residents, policy on national reserve of Bianxiao Tea 6 ,
administration and preferential policy on gold and silver
ornaments exclusively for ethnic minority residents, policy on the
production of goods exclusively for ethnic minority residents and
favorable tax policy for designated producers of goods that were
included in the catalog of ethnic minority goods (of provinces,
districts and cities) and that were within prescribed quota.
1973
Report on Strengthening the Production and Supply of Goods
Exclusive for Ethnic Minorities by the Ministry of Light Industry
and the Ministry of Commerce was approved by the State Council,
in which preferential tax policies were included.
Source: summarized by author
During this period, tax policies supporting EMRs development were mainly
focused on tax reduction and exemption for the production and trade of daily
6 Bianxiao Tea, commonly known brick tea, is sold exclusively in the border regions, plateau
and pasture areas in China. The CPC and the government classify it as daily necessity of ethnic minority residents to ensure its production and supply.
5
necessities of EMRs and ethnic minority residents. The Program for the
Implementation of Regional Ethnic Autonomy of the People's Republic of China in
1952 and the Temporary Methods on Fiscal Administration of Ethnic Autonomous
Regions in 1958 laid the legal foundation for EMRs’ fiscal system. The Report on
Improving Fiscal System of Ethnic Autonomous Regions and Rules on Improving
Fiscal System of Ethnic Autonomous Regions (Draft) in 1963 specified the fiscal
and budget administration methods for ethnic autonomous regions, which
empowered ethnic autonomous regions with tax administration power to certain
extent.
2.2 From 1979 to 1993: Fiscal contracting system
During this period, fiscal administration was directed toward the fiscal
contracting system. In compliance with regional development strategies, the
central government provided EMRs with certain subsidies and continued to
implement tax policies supporting EMRs development, as shown in Table 2.
Table 2 Major Tax Policies Supporting EMRs Development (1979-1993)
1980
A fiscal system started to be rolled out across the country where
responsibilities of tax collection and revenue expenditure were
divided between central and sub-national governments and among
different levels of local governments, and fiscal contracting was
carried out across the country. Certain special rules concerning
EMRs remained unchanged, and the central government specified
that governments of eight ethnic regions (i.e. five Ethnic Minority
Autonomous Regions together with Yunan, Guizhou and Qinghai)
could keep all the tax revenues and enjoy subsidy in case of
shortfall. The subsidy would remain unchanged for 5 years.
1982
Notice on Increasing the Procurement Price of Raw Material of
Bianxiao Tea by the Ministry of Commerce, the State Administration
of Commodity Prices and the State Ethnic Affairs Commission
specified to increase the standard and procurement prices of six
types of raw materials of Bianxiao Tea by more than 10% and to
lower tax by 20%.
1984
Temporary Methods on Administration of Small Border Trade
specified that small border trade would be administered by the
people’s governments of relevant provinces and autonomous
regions, and that border trade among residents should not exceed
certain transaction amounts within which customs, product tax and
VAT would be exempted.
1985
Report of Ministry of Commerce on Issues Regarding Promoting
Commerce of Ethnic Minority Regions specified necessary support to
commercial activities of ethnic minorities, for example to continue
the policies on tax reduction and exemption for commercial
enterprises of counties enjoying the three preferential treatment
6
measures, to promote the production of ethnic minority goods, etc.
1989
Request for Instructions on Issues Regarding Policies on Poverty
Alleviation of Ethnic Minority Regions by the State Ethnic Affairs
Commission and the Leading Group of State Council on Economic
Development of Impoverished Regions rolled out favorable policies
on tax and fees to promote the growth of advantageous industries.
1989
Joint Notice on Helping Ethnic Minority Regions to Develop and
Exploit Geological and Mineral Resources by the Ministry of Geology
and Mineral Resources and the State Ethnic Affairs Commission
specified measures to help EMRs to accelerate the development and
exploitation of geological and mineral resources and also provided
relevant favorable tax treatments.
1991
Notice to Release the list of Enterprises within Textile Industry
Designated to Produce Ethnic Products by the State Ethnic Affairs
Commission, the State Administration of Taxation, the People’s Bank
of China and the Ministry of Textile Industry designated 500
enterprises within the textile (silk) industry to produce ethnic
products, and those enterprises could enjoy tax reduction and
exemption policies and favorable loan policies.
1992
Notice on Issues Regarding Foreign-Related Tax Policies on
Opening-up Border, Coastal and Inland Provincial Capitals and Cities
along the Yangtze River by the State Administration of Taxation
specified that foreign producers in 18 border, coastal and inland
provincial capitals as well as 5 cities along the Yangtze River could
enjoy a reduced enterprise income tax rate of 24%. Foreign
producers engaging in prescribed business could, with approval of
the State Administration of Taxation, have their enterprise income
tax rate lowered by 15%.
Source: summarized by author
Tax policies in this period kept the tax reduction and exemption of the previous
period that aimed at ensuring the production, livelihood, trade and poverty
alleviation of EMRs, apart from which, there were also fiscal revenue policies to
compensate EMRs under the regional development strategy of the country and
tax policies to boost the opening-up initiative of EMRs in non-coastal areas. The
year 1984 witnessed the approval and implementation of the Law of the People’s
Republic of China on Regional Ethnic Autonomy in which numerous articles
specified that EMRs were entitled with preferential treatment, support, subsidies
and grants from superior authorities. During this period, legal and institutional
foundation was set up for the EMRs to perform autonomous fiscal
administration.
2.3 From 1994 till now: Tax assignment system
7
The reform toward the tax assignment system in 1994 was a milestone in the
evolution of China’s fiscal system. The exploration on public fiscal system started
in 1998. The taxation system was reformed across the board under the principle
of “unified tax code, fair tax burdens, streamlined tax system and reasonable
division of power”. During this period, a significant feature of fiscal policy
regarding EMRs development was the enhanced transfer of payment from the
central government to EMRs, and relevant tax policies were primarily focused on
bringing benefits to EMRs, as shown in Table 3.
Table 3 Major Tax Policies Supporting EMRs Development (1994 till now)
1994
The State Council decided in the National Eight-Seven Poverty
Alleviation Plan to dedicate human and financial resources from
1994 to 2000 to provide adequate food and clothing for 80
million impoverished people in rural China. Newly established
enterprises in the old revolutionary areas, ethnic minority
autonomous areas, inland border areas and impoverished areas
recognized by the government could enjoy full or partial income
tax rebate within 3 years after tax payment was made.
1994
Preferential tax policies were formulated for the pilot of EMRs
reform and opening-up, the pilot of rural reform and the zone of
high-and-new technology development. HulunBuir and Wuhai of
Inner Mongolia, the Yanbian Korean Autonomous Prefecture, the
Qiandongnan Miao and Dong Autonomous Prefecture and the Ili
Kazak Autonomous Prefecture of Xinjiang
Uygur Autonomous Region were among the first to join the pilot
of EMRs reform and opening-up.
1996-1
997
The State Council formulated border trade policies and released
the Response on Issues Regarding Ethnic Trade and Production of
Ethnic Goods for the Ninth Five-Year-Plan Period, which was
aimed at implementing preferential economic policies
concerning interest rate for loan of designated enterprises, fiscal
discount and taxation.
1998
The Notice on Issues Regarding Taxation of Ethnic Trade
Enterprises by the Ministry of Finance and the State
Administration of Taxation specified on the reduction,
exemption and rebate of VAT and enterprise income tax.
Favorable tax policies were formulated for ethnic trade counties,
ethnic trade corporations at provincial and prefecture level and
enterprises designated to produce ethnic goods during the ninth
five-year-plan period, and preferential tax treatments were also
covered in the Notice on Supplementary Rules to Further Promote
Border Trade.
1999
The State Administration of Taxation released the Notice on
Applying a Reduced 15% Tax Rate for Enterprise income tax to
Foreign Invested Enterprises in Mid-Western Regions for Three
8
Years.
2001
State Administration of Taxation released the Notice on Issues
Regarding VAT Exemption for Subsidies to Programs of Returning
Farmland to Forest and Grassland.
2001-2
003
The Notice on Issues Regarding Preferential Tax Policies for the
Initiative to Develop the Western Regions by the Ministry of
Finance, the State Administration of Taxation and the General
Administration of Customs specified that domestic and foreign
invested enterprises engaging in industries encouraged by the
government in the western regions of China could enjoy a
reduced 15% enterprise income tax rate from 2001 to 2010.
Upon the fourth year of the Initiative for Development of
Western Regions, the central government enhanced support to
western regions in terms of public investment, tax policies and
transfer of payment, for example formulating favorable tax
policies on the construction of Qinghai-Tibet railway and the
West-East natural gas transmission project.
2006
The Notice on Continuing to Implement the Preferential Policies
on Ethnic Trade and Production of Ethnic Products by the State
Ethnic Affairs Commission stipulated that favorable tax policies
would continue. The Notice on Continuing to Implement
Preferential VAT Policies for Goods Sold by Ethnic Trade
Enterprises and the Bianxiao Tea Produced and Distributed by
Government-Designated Enterprises and Distributors by the
Ministry of Finance and the State Administration of Taxation
specified that from 2006 to 2008, VAT was exempted for goods
(excluding oil and tobacco) produced by ethnic trade enterprises
at/below country level in ethnic trade counties and sold by
supply and marketing cooperatives as well as for Bianxiao Tea
produced by government-designated enterprises and sold by
relevant distributors.
2006
The Ministry of Finance and the State Administration of
Taxation released the Notice on Issues Regarding Changes to the
Catalog of Items Applicable to the Preferential Tax Policies on the
Western Region Development Initiative.
2007-2
008
The Enterprise income tax Law and the Tax Policies Supporting
Development of Cultural Industry contained tax policies
dedicated to ethnic autonomous regions and cultural industries
of ethnic minorities.
2011
The Notice on Preferential Income Tax Policies for
Newly-Established Enterprises in Areas with Financial Difficulties
of Xinjiang specified that from 2010 to 2020, newly-established
enterprises in areas with financial difficulties of Xinjiang could
enjoy favorable enterprise income tax treatment provided that
9
they were included in the Catalog of Favorable Income Tax
Treatment for Enterprises Engaging in Encouraged Industries in
Areas with Financial Difficulties of Xinjiang.
2011
The State Council released the Opinions on Supporting the
Construction of Kashgar and Horgos Economic Development Zones
which specified relevant fiscal and tax policies.
2011
The Notice on Continuing to Implement the VAT Policies on
Bianxiao Tea by the Ministry of Finance and the State
Administration of Taxation specified that Bianxiao Teas was
exempted from VAT for from 2011 to 2015.
2012
Fiscal policies promoted and implemented by the State Ethnic
Affairs Commission included the Notice on Issues Regarding
Taxation of Ethnic Trade Enterprises, the Preferential Policies on
Ethic Trade and Production of Ethnic Goods, the Initiative to
Develop Border Regions and to Enrich Residents of Border Areas,
the Preferential VAT Policies for Goods Sold by Ethnic Trade
Enterprises and for Bianxiao Tea Produced and Distributed by
Government-Designated Enterprises and Distributors, etc.
2014
The Ministry of Finance and the State Administration of
Taxation formulated respectively the Notice on Adjusting
Resource Tax for Crude Oil and Natural Gas and the Reform of
Resource Tax on Coal.
2015
The Catalog of Value-Added Tax Preferences for Products and
Labor Services Involving the Comprehensive Utilization of
Resources by the Ministry of Finance specified on the reform and
adjustment of resource tax.
2015
The Ministry of Finance and the State Administration of
Taxation released the Notice on the Application VAT Refund
(Exemption) Policies to Goods Entering the China-Kazakhstan
Horgos International Border Cooperation Center.
2016
The Ministry of Finance, the State Administration of Taxation
and the Ministry of Water Resources released the Temporary
Methods on Pilots of Water Resource Tax Reform (for the pilot in
Hebei Province).
Source: summarized by author
An important feature of tax policies during this period, apart from those to
support EMRs development on areas such as poverty alleviation, ethnic goods
and ethnic trade, is that a lot of them were formulated to bring benefits to EMRs
in such forms as tax policies on the Western Region Development Initiative and
on resource tax reform and improvement. Another critical feature is the focus of
tax policies on promoting opening-up of EMRs.
10
3. Effectiveness of Tax Policies Supporting EMRs Development
3.1 Preferential tax policies alleviate tax burdens of EMRs
Under the unified tax system and tax code framework, measurements of macro
tax burden (MTB) of EMRs against the national average tend to show the direct
impact of preferential tax policies on EMRs. Domestic studies suggest that less
developed areas, particularly community-level governments of those areas, have
higher proportion of non-tax revenue to total fiscal revenue in their efforts to
raise fiscal revenue. Because non-tax revenue also adds to the “tax burden” of
local enterprises and residents, the current paper measures and compares macro
tax burdens of EMRs from different perspectives.
3.1.1 Overall MTB: EMRs vs. sub-national localities
Overall MTB in this section refers to the proportion of a region’s total fiscal
revenue to GDP of that region7. A comparison of MTB between EMRs and
sub-national localities of the country8 based on data from 1952 to 2005 tends to
show the overall MTB of EMRs, as illustrated in Figure 1.
Figure 1 Comparison of Overall MTB between EMRs and
Sub-National Localities Average (1952-2015)
Source of data: See Appendix 1
7 This measurement is used by the IMF to calculate tax burden.
8 Sub-national localities of the country refer to 4 municipalities, 5 autonomous regions, and
22 provinces.
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
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52
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Inner Mongolia Guangxi Ningxia
Tibet Xinjiang EMRs
Sub-National Localities
11
The overall MTB of the five EMRs fluctuates around 10% while the national
average moves around 20%. The average MTB of EMRs is lower than that of
national average by 10 percentage points (9.88%) with the largest gap appearing
in 1973 (18.44%) and the smallest in 2001 (0.57%). This suggests that tax
policies supporting EMRs development have reduced EMRs tax burdens
significantly, facilitating EMRs industrial development.
3.1.2 Provincial-level MTB: EMRs vs. sub-national localities
The tax assignment reform in 1994 divides inter-governmental revenues into
central fiscal revenue and local fiscal revenue. This section discusses the tax
burden imposed by the local governments of EMRs, and in this context, the MTB
refers to the proportion of a region’s general budgetary revenues to the region’s
GDP, as illustrated in Figure 2.
Figure 2 Comparison of Provincial MTB between EMRs and
Sub-National Localities Average (1995-2015)
Data source: See Appendix 2.
The average provincial MTB of EMRs is basically the same with that of national
average. The former was higher than the latter by 0.3% in 1998 and lower by
1.51% in 2015. Since 2001, the sub-national localities average has been higher
than EMR’s average by 1 percentage point (0.64%). Generally speaking, the MTB
of EMRs under provincial level has been lower than national average since 2001,
suggesting that local governments of EMRs dealt with relatively small tax
burdens compared with local governments of the other regions.
3.1.3 Narrow MTB: EMRs vs. sub-national localities
This paper also takes into account the narrow MTB, i.e. the proportion of tax
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Inner Mongolia
Guangxi
Ningxia
Tibet
Xinjiang
EMRs
Sub-National Localities
12
revenue to GDP. Statistics from 2000 to 2015 are used because of data availability,
as shown in Figure 3.
Figure 3 Comparison of Narrow MTB between EMRs and
Sub-National Localities Average (2000-2015)
Source of Data: See Appendix 3.
As shown in Figure 3, narrow MTB of EMRs was lower than national average
from 2000 to 2015 with the smallest gap in 2000 (2.6%) and the largest in 2014
(5.86%). Moreover, EMRs had lower proportion of tax revenue of central
government to local GDP compared with sub-national localities average and their
tax burden coming from the central level was not heavier than sub-national
localities average. The proportion of central-level tax revenue to total tax revenue
of EMRs ranges from 44.92% to 59.51%, however the national average ranges
from 51.61% to 64.06%.
Comparison of data from different perspectives shows that EMRs has smaller
MTB than other localities of the country, meaning that the direct impact of
preferential tax policies lies in the mitigation of EMR tax burdens.
3.2 Differences in tax structure before and after resource tax reform suggest that preferential tax policies contribute to EMRs’ fiscal revenue
Currently there are 17 types of taxes in China and they are further classified into
5 categories: 1) turnover taxes including VAT, consumption tax and customs duty
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Tax Burden in EMRs
Tax Revenue of Central Government/GDP in EMRs
Tax Burden in Sub-National Localities
Tax Revenue of Central Government/GDP in Sub-National Localities
13
(business tax has been replaced with VAT); 2) income taxes including enterprise
income tax and individual income tax; 3) resource taxes including resource tax,
urban land use tax and farm land occupation tax; 4) property taxes such as real
estate tax, vehicles and boats operation tax and tax on contract; and 5)
behavioral taxes including stamp tax, city maintenance and construction tax, land
appreciation tax9, vehicle purchase tax, tonnage tax and tobacco tax.
China adopts a composite tax system with two pillars—turnover taxes and
income tax. The division of tax revenues between the central and the provincial
governments became very clear in 1994, but there were no specified or legally
prescribed rules regarding how the sub-national tax revenues and the portion of
shared tax revenues belonging to local governments should be distributed among
various levels of local governments. Therefore tax revenue in this paper also
refers to the sub-national tax revenue of the five autonomous regions, and the
local tax structure is analyzed to study the implication of resource tax on the
growth of EMRs’ fiscal revenue. 10See Table 4.
Table 4 Comparison of Sub-National Tax Revenue Structure
Between EMRs and Sub-National Localities (%)
Five Autonomous Regions
Domestic
VAT
Business
Tax
Enterprise
Income Tax
Personal
Income Tax
Resource
Tax
2000 20.74 30.09 13.74 9.45 2.36
2001 19.46 28.01 22.13 11.43 2.30
2002 18.20 29.34 8.59 6.98 2.09
2003 18.57 31.31 6.27 5.34 1.83
2004 20.81 34.08 6.35 5.63 1.84
2005 20.79 31.78 7.24 5.42 2.24
2006 20.66 29.57 7.71 4.80 2.87
2007 24.30 34.81 10.10 6.19 3.42
2008 23.30 33.13 11.21 5.69 3.33
2009 18.61 35.94 11.10 5.55 3.49
2010 17.40 36.83 12.18 5.57 4.39
2011 16.50 34.92 14.32 5.77 5.63
2012 14.08 33.44 13.39 4.84 5.35
2013 13.90 34.10 11.59 4.19 4.99
2014 14.85 31.35 10.33 3.93 5.05
2015 14.10 29.44 9.56 4.29 5.74
9 Land appreciation tax is sometimes categorized as resource tax or property tax by some
textbooks. 10
In terms of local-level tax revenue structure, analysis is focused on turnover tax, income tax and resource tax (as tax type), which also provides data for further studies on major tax types of EMRs and their industry development and trends.
14
Sub-National Localities
Domestic
VAT
Business
Tax
Enterprise
Income Tax
Personal
Income Tax
Resource
Tax
2000 22.41 31.28 19.28 9.81 1.22
2001 21.12 28.68 25.32 11.11 1.04
2002 23.87 34.94 16.16 9.21 1.14
2003 24.88 37.51 13.49 7.68 1.13
2004 24.26 37.73 14.41 7.54 1.07
2005 23.98 36.77 15.17 7.50 1.27
2006 23.67 36.48 15.34 7.20 1.52
2007 21.96 35.90 16.94 7.16 1.47
2008 21.03 34.27 18.16 6.89 1.40
2009 19.79 37.21 15.40 6.63 1.42
2010 18.34 37.36 16.35 6.57 1.42
2011 16.48 36.25 17.27 6.50 1.60
2012 14.55 32.99 15.12 4.94 1.82
2013 15.67 31.82 14.15 4.88 1.79
2014 16.66 30.10 14.31 5.02 1.77
2015 16.31 30.73 14.46 5.53 1.60
Source of data: Calculated based on statistics from the China Taxation Yearbook from 2000 to
2016. See Appendix 4 about the tax revenue structure of Inner Mongolia, Guangxi, Ningxia,
Tibet and Xinjiang.
As shown in the above table, the proportion of turnover tax revenue to
sub-national tax revenue and the proportion of income tax basically share the
same evolution path from 2000 to 2015. However the proportion of resource tax
demonstrates a strong upward trend, as shown by the fact that the figure of
national average varies by less than 0.5 percentage points yet that of EMRs shows
apparent fluctuation, increasing from 2.61% in 1999 to 5.74% in 2015. To be
more specific, in terms of the proportion of resource tax to total tax revenue,
Inner Mongolia, Ningxia and Xinjiang autonomous regions experience significant
growth, Guangxi, a relatively mild increase and Tibet, a decrease. As resource tax
is gradually applied more broadly, for example in the Hebei pilot program in
2016, Guangxi is expected to see more contribution of resource tax to local tax
revenue (for more data see Appendix 4). Therefore, it is concluded that resource
tax reform has contributed a lot to the increase of EMRs’ local fiscal revenue.
4. Analysis on the Root Causes of Problems Concerning Tax
Policies Supporting EMRs Development
The ultimate goal of tax policies supporting EMRs development is to enhance the
capability of EMRs to pursue self-sustained development. In fact, the major
players to promote regional development are governments, enterprises and
15
households. It requires complex and systemic efforts to build self-sustained
development capability and the prosperity of enterprises and households
depends on industrial development in a competitive market where specific tax
policies are implemented. Therefore, from a market perspective, tax policy is
mainly dedicated to enhancing industrial competitiveness of EMRs, and from a
government perspective, tax policy is aimed at strengthening the public service
capacity of EMRs’ governments. As a result, it is important to analyze EMRs’
industries from a taxation perspective and to study on local tax system.
4.1 Current tax code and EMRs’ economic conditions enhance the effectiveness of tax policies
4.1.1 Rules of current tax code on tax type administration are more likely to
cause divergence between tax source and tax revenue in EMRs
The fact is that enterprises are more likely to register and reside in economically
developed areas, which is particularly the case for headquarters. Rules of China’s
current tax code on place of tax payment lead to the flow of most tax revenues to
developed areas, and this is typically the case to enterprises whose branches are
located in different provinces, municipalities directly administrated by the State
Council and autonomous regions.
First, about VAT which is the most important part of turnover tax. Current rules
concerning VAT are the Temporary Rules on Value-Added Tax in 2008 (Directive
No. 538 of the State Council) and the Notice on Implementing the Pilot Program of
Replacing Business Tax with Value-Added Tax in an All-round Manner by the
Ministry of Finance and the State Administration of Taxation. Concerning the
place of VAT payment, it is specified in the latest tax rules that: “1) Business
operator with fixed premise should declare tax to the competent tax authority of
the place where the institution is located or the individual resides. Head office
and branch of the same business operator, if not located in the same county (or
city), should declare tax to local competent tax authorities at places where they
are located respectively. With the approval of the Ministry of Finance and the
State Administration of Taxation or public finance and tax authorities authorized
by MOF or SAT, the head office may declare consolidated tax to the competent tax
authority at the place where the head office is located; and 2) Business operator
with fixed premise that sell goods or provide labor service at counties (or cities)
other than the place where it is located should apply to the competent tax
authority of the place where it is located for Certification of Tax Administration
for Outbound Business Activities and declare tax to the same authority; the
abovementioned business operator, if without the certification, should declare
tax to the tax authority of the place where the sale or labor service occurs, and if
tax is not declared, tax should be collected by the tax authority of the place where
the business operator is located.” However, tax code concerning place of business
tax payment prior to 2015 specified that “Taxpayer who provides taxable labor
16
service should declare tax to the competent tax authority of the place where the
taxpayer is located or the individual resides; taxpayer who provides labor service
in construction industry and other taxable labor service specified by the fiscal
and tax authorities of the State Council should declare tax to the competent tax
authority of the place where the service is provided; and taxpayer who sells or
rents real estate should declare tax at the place where the estate is located.
Second, about enterprise income tax which is the most important part of direct
tax. In and prior to 2012, enterprise income tax is a major part of the
consolidated tax of head office and branches. In 2012, the State Administration of
Taxation released the Temporary Methods on Administration of Collection of
Enterprise income tax in Consolidated Taxation on Cross-Regional Business
Operation, in which it is stipulated that income tax of institutions whose head
office and branches are located in different provinces or cities should be collected
under the principle of “unitary calculation, multi-tiered administration,
pre-payment of tax at place of business, consolidated settlement and
coordination among fiscal authorities”, and as a result, horizontal distribution of
regional taxes became more fair. Although it is specified in the tax code that
“otherwise specified by the State Council, an enterprise should not pay income
tax in consolidation with other enterprises”, enterprises with branches can still
choose place of tax payment by using legal person qualification and via
secondary branch.
In addition, about consumption tax that is not collected at local level. Tax return
of central government to local governments is divided into consumption tax
return and the part for consumption tax reform, and consumption tax of some
consuming goods is collected during retail stage. As a result, tax revenue that
should be attributed to EMRs is collected at economically developed areas, for
example, the consumption tax of refined oil.
Various studies have discussed the unfairness in the horizontal distribution of
tax revenues in China including those of LIU Yi et al (2009) on distribution of VAT
and business tax revenues, those of HUANG Xialan (2009) on divergence of tax
sources among regions and LIU Jinshan (2014) on deviation of turnover tax and
regional economic development. Imbalances in the horizontal distribution of tax
revenues under the current tax code highlight the impact of preferential tax
policies on EMRs. What truly reflects the effectiveness of favorable tax treatment
is the mitigation of tax burdens of EMRs under a fair distribution framework of
tax revenues among regions. However, it is not suffice to solve the problem
completely by simply adjusting tax code concerning place of tax payment and tax
policies.
4.1.2 Economic conditions of EMRs make them dependent on resource-intensive industries in the short term
EMRs are located in remote areas with complex landscape and diverse climate
17
conditions because of historical and geographic reasons, which endows EMRs
with rich ecological and environmental resources. Currently, EMRs have a total
land area of 6.23 million square kilometers, accounting for 63.89% of the
national total. The area of grassland takes up 75.07% of the country’s total; the
pasturing area and the semi-farmland-semi-pasturing land, 75%; forest volume,
46.57%; and water resource reserve, 65.93%. The major mineral resources of
EMRs are coal, iron ore, phosphate ore and sylvine which account for 37.1%,
24.4%, 40.7% and 95.9% of national total respectively 11 . Inner Mongolia
abounds with more than 60 kinds of underground minerals, Xinjiang has 118
kinds of minerals and Ningxia nearly 50 kinds. Guangxi has one of the country’s
largest reserves of underground rare metals, and Tibet has more than 40 kinds of
minerals.
However, economic conditions mean that resource-intensive industries are the
largest component of EMRs’ industrial structure. Resource tax reform has, to
some extent, increased local fiscal revenue of EMRs. But low-tech
resource-intensive industries with poor added-value are mostly in the lower end
of the industrial chain, and that explains why resource tax is the largest
contributor to tax revenue. The non-renewable and gradual depletion of
resources mean that the contribution of resource tax is not sustainable. In order
to keep the proportion of resource tax revenue to EMRs’ fiscal revenue, resource
tax collection has to reach out to more areas. In fact, pilot on water resource tax
was already started in Hebei province in 2016.
Tax policy determines tax structure to some extent, and may further influence
regional economic development through economic growth determinants.
Overseas studies on the relationship between tax structure and economic growth
have not reached any consensus (Ganghof, 2006; Cnossen, 2012; Tiwari and
Mutascu, 2014). In particular, China is faced with more severe problems such as
the incompatibility between tax structure and economic structure (Guo Jing, et al,
2015). For the government to administer taxation by law (LI Fei, 2014), it is
important to implement structural tax reduction policies (Xu Shanda, 2017)and
to analyze the relationship between EMRs’ tax structure and social and economic
development from the perspective of tax incidence.
4.2 Tax policies supporting EMRs development should be more compatible with development goals
4.2.1 Competition of local governments’ tax policies mitigates tax
preferences on EMRs
Promotion of Chinese officials under the current political system leads to heavy
11 Department of Economic Development of State Ethnic Affairs Commission and the Department of Comprehensive Statistics of the National Economy of National Bureau of Statistics. China’s Ethnic Statistical Yearbook 2007. The Ethnic Publishing House, 2008: p 327.
18
competition among local governments. All the 31 provincial governments exert
themselves to excel at public service provision, human resource development
and tax revenue growth. Therefore, the effectiveness of tax reduction and
exemption for local governments of EMRs is very limited, if any. For example, the
Article 34 of the Law on Regional Ethnic Autonomy specifies that "autonomous
authorities of Ethnic Autonomous Regions, while implementing national tax code,
may reduce or exempt taxes on those items that belong to local fiscal revenue
and should be treated favorably and encouraged with tax-related means, apart
from items on which taxes are reduced or exempted with approval of the central
government". In Article 29 of the Law on Enterprise Income Tax, it is stated that
“autonomous authority of ethnic autonomous locality may decide to reduce or
exempt certain portion of income tax paid by local enterprises given that the
portion is shared by the autonomous ethnic locality”. Non-ethnic regions may
also provide preferential tax treatment within its authority, which mitigates the
effectiveness of local preferential tax treatment of EMRs. Such favorable policies
include those on tax base (such as tax remission, losses offset with profits and
exemption of fees), on tax amount (such as investment tax credit and direct tax
reduction and exemption) and on time of tax payment (such as tax deferral and
accelerated depreciation). As a result, the more effective favorable tax policies
are those coming from the central government, for example the tax reduction and
exemption policies dedicated to supporting EMRs prior to 1994 and the
preferential tax policies for the Western Region Development Initiative of EMRs
that covered wide areas and brought great benefits to the public.
4.2.2 Building on major tax types of EMRs based on regional industrial
advantages to improve fiscal capacity
It can be drawn from Figure 1 that turnover tax and income tax are the primary
pillars of local tax revenues of EMRs. From 2000 to 2015, the total revenue of VAT,
business tax, enterprise income tax and individual income tax took up more than
57% of sub-national tax revenue of EMRs12, which demonstrated the same trend
with that of the national average (65%). This means that the other 11 tax types
accounted for less than 50% of local tax revenue. Turnover tax and income tax
are regarded as the best indicators of industrial development status of EMRs.
Under the current tax system, there is still a long and difficult way to go for
resource taxes (including resource tax, urban land use tax and farmland use tax,
property taxes (such as real estate tax, vehicles and vessels tax and deed tax) and
behavioral taxes (including fixed asset investment orientation regulation tax,
stamp tax, urban maintenance and construction tax, land appreciation tax) 13to
become major tax types in EMRs14. In the short and long term, to increase local
12
Since the replacement of business tax with VAT in 2016, the central government and the local governments each get 50%. 13
Tobacco tax is also a part of local taxes. 14
Some developed countries make property tax the pillar tax type in local tax structures, some have income tax as the pillar and some adopt a dual-pillar structure based on a
19
fiscal revenue of EMRs, the most fundamental solution lies in the development of
EMRs’ advantageous industries, and the most direct and effective tax policy is the
increase of turnover tax and income tax. And this leads to the issue in the first
place—reduction of tax burdens.
5. Improving Tax System and Policies Supporting EMRs
Development
It is pointed out in the Third Plenary Session of the 18th CPC Central Committee
that we should “improve legislation, clarify government responsibilities, reform
tax system, stabilize tax burden, promote transparent budget, enhance efficiency
and build a modern fiscal system that mobilizes the initiative of the central and
local governments”. Improving tax system is the “root” and “key” to realize the
goals of tax policies. The general goal of tax policies supporting EMRs
development is to build the capacity of EMRs to pursue self-sustained
development. It is important to adopt measures strongly compatible with policy
goals, and this requires a thorough study on the formulation of China’s tax
policies and rules, for example on how tax rules are made and who has power
over tax collection and administration. Such a topic goes beyond economic or
fiscal area and reaches out to the political world.
5.1 Tax reform toward fair distribution of local tax revenues
The Legislation Law of China specifies that basic tax system covering creation of
new tax type, determination of tax rate and tax collection and administration
should be governed by law, and that the power of tax code formulation and tax
collection and administration resides in the National People’s Congress and its
Standing Committee. A fair tax system not only calls for rules that ensure the role
of taxation in income redistribution, but also requires fair representation and
democratic participation of tax experts, taxpayers and government officials in the
formulation of tax rules and regulations. For preferential tax policies on less
developed areas to truly reduce their tax burdens, the right to tax revenues of the
localities should be assured in the design of tax rules.
5.2 Lower tax rate promoting industrial development of EMRs
Compared with the favorable tax policies for special economic zones, coastal
development zones and economic and technological development zones, it is a
more righteous undertaking of the government to provide preferential tax
treatment to less developed EMRs that receive special support and incentives
from the country. Compared with the efforts of the central government to realize
public services equalization of EMRs by large amount of financial transfer
payment, it would be more effective to promote social and economic
combination of both.
20
development of EMRs by providing preferential treatment for EMRs at central
level taxation, by promoting industrial development of EMRs, by increasing local
fiscal revenue of EMRs and by offering local public goods that meet the
differentiated demands of ethnic minorities.
In short, against the backdrop of supply-side fiscal reform, reform toward fair tax
system is a more critical contributor than tax reduction to supporting EMRs
development, and protecting local right to tax revenues with laws and
regulations is more important than preferential tax treatment. In order to further
narrow the development gap between EMRs and other regions, preferential tax
policies of lower tax rate (and tax reduction and exemption) should continue to
exist in the short and mid-to-long run.
Appendix
Appendix 1
Comparison of Overall MTB between EMRs and
Sub-National Localities Average (1952-2015) (%)
Inner
Mongolia Guangxi Ningxia Tibet Xingjiang EMRs
Sub-National
Localities
1952 10.97 17.08 16.01 1.96 9.30 12.69 25.62
1953 5.56 18.37 12.94 2.22 13.15 11.73 25.88
1954 9.51 20.09 12.36 2.24 14.13 13.86 28.54
1955 12.06 18.73 12.91 2.12 14.06 14.59 27.39
1956 11.22 16.47 11.70 3.90 14.30 13.39 27.26
1957 14.76 13.82 14.22 8.92 15.40 14.41 28.39
1958 15.22 18.99 17.55 2.18 19.90 17.32 29.05
1959 19.65 23.51 21.05 12.59 25.31 22.07 33.85
1960 24.59 23.01 21.81 39.85 25.24 24.60 39.28
1961 19.62 13.88 18.85 21.09 16.08 16.86 29.19
1962 13.37 14.25 9.76 12.36 16.05 14.08 27.28
1963 13.21 14.74 10.91 6.42 18.92 14.72 27.75
1964 13.28 15.23 13.82 8.01 18.91 15.11 27.48
1965 12.98 15.55 13.65 6.85 18.73 15.03 27.58
1966 12.64 17.68 12.77 3.01 19.44 15.56 29.91
1967 12.65 14.37 7.19 0.29 13.30 12.56 23.64
1968 11.80 9.04 6.46 -7.09 11.23 9.75 20.97
1969 8.41 14.90 8.22 -9.77 7.02 9.82 27.18
1970 11.26 18.63 15.17 -5.80 15.46 14.39 29.43
1971 8.78 17.42 15.26 -3.14 15.84 13.44 30.69
1972 7.96 16.64 14.49 -3.56 12.26 12.39 30.44
1973 7.74 16.33 18.39 -5.63 6.40 11.32 29.76
1974 6.21 17.33 15.10 -4.37 5.56 11.15 28.07
21
1975 5.64 16.57 18.51 -5.81 3.61 10.44 27.21
1976 5.53 16.29 17.96 -3.90 6.22 10.62 26.38
1977 5.68 17.56 14.54 -1.96 10.19 11.66 27.31
1978 11.90 18.87 24.31 -2.32 18.26 16.28 31.24
1979 7.11 14.25 21.15 -3.02 12.04 11.54 28.39
1980 6.04 12.63 12.72 -6.41 7.58 9.00 25.67
1981 5.34 11.21 8.25 -5.49 2.77 6.96 24.18
1982 5.56 10.09 8.34 -5.47 6.71 7.45 22.90
1983 6.60 10.09 8.55 -4.67 7.16 7.85 23.03
1984 6.60 8.96 9.33 -8.04 8.04 7.46 22.91
1985 8.05 11.15 9.60 -3.39 7.55 8.74 22.36
1986 8.82 12.28 10.61 -0.44 7.86 9.69 20.80
1987 9.15 12.64 10.39 -0.20 7.80 9.95 18.39
1988 8.91 10.82 10.11 -0.11 8.02 9.27 15.79
1989 9.79 10.80 10.70 0.63 8.95 9.85 15.76
1990 10.33 10.43 9.62 0.65 7.95 9.52 15.84
1991 10.95 10.78 9.49 0.76 7.88 9.79 14.57
1992 9.27 9.46 9.30 3.26 6.48 8.52 13.08
1993 10.53 11.00 10.45 4.18 6.95 9.73 12.56
1994 10.00 9.06 5.35 3.11 4.26 7.83 11.16
1995 5.10 5.30 5.13 3.83 4.70 5.07 10.18
1996 9.11 5.33 0.62 3.75 5.33 6.05 10.32
1997 9.29 8.82 11.81 4.95 13.02 10.04 10.85
1998 10.39 9.71 12.72 4.84 10.96 10.26 11.59
1999 10.42 10.20 25.94 5.15 6.40 10.10 12.64
2000 10.11 10.58 28.94 5.37 14.90 12.43 13.36
2001 9.79 11.29 36.34 5.30 19.56 14.21 14.78
2002 10.66 12.11 12.21 5.39 22.41 14.03 15.53
2003 10.80 12.10 11.98 5.42 6.80 10.24 15.80
2004 11.99 11.76 12.47 5.44 19.78 13.60 16.31
2005 13.74 11.93 14.20 5.76 20.74 14.56 16.90
2006 14.42 11.98 15.18 5.94 23.56 15.46 17.66
2007 13.00 12.09 15.71 6.78 18.17 13.78 18.99
2008 13.03 12.01 14.84 7.24 11.47 12.38 19.19
2009 14.14 12.46 15.79 7.00 11.53 13.08 19.63
2010 14.89 12.84 16.98 8.37 12.75 13.82 20.12
2011 15.75 13.16 17.67 10.65 15.74 14.92 21.23
2012 15.73 13.89 19.65 13.64 16.68 15.49 21.70
2013 15.71 13.85 20.49 13.54 18.43 15.87 21.71
2014 15.08 15.45 20.45 22.74 24.57 17.57 21.80
2015 15.63 15.20 21.00 23.16 26.42 18.06 22.21
Source of data: Calculated based on statistics from the China Statistical Yearbook and the Statistical Yearbook
of 5 autonomous regions from 1952 to 2016.
22
Appendix 2
Comparison of Provincial MTB between EMRs and
Sub-National Localities Average (1995-2015) (%)
Inner
Mongolia Guangxi Ningxia Tibet Xingjiang EMRs
Sub-National
Localities
1995 5.10 5.30 5.13 3.83 4.70 5.07 4.87
1996 5.60 5.33 6.25 3.75 5.36 5.43 5.22
1997 5.73 5.46 6.27 3.82 5.24 5.49 5.55
1998 6.15 6.26 7.23 3.98 5.91 6.15 5.85
1999 6.28 6.78 7.12 4.32 6.13 6.45 6.18
2000 6.17 7.07 7.06 4.57 5.80 6.44 6.39
2001 5.80 7.84 8.17 4.39 6.38 6.83 7.04
2002 5.81 7.40 7.02 4.51 7.22 6.80 7.00
2003 5.81 7.22 6.74 4.40 6.80 6.59 7.17
2004 6.47 6.93 6.98 4.55 7.05 6.75 7.35
2005 7.11 7.10 7.79 4.84 5.98 6.83 8.06
2006 6.94 7.22 8.45 5.01 7.21 7.14 8.34
2007 7.67 7.19 8.71 5.90 8.11 7.62 8.72
2008 7.66 7.38 7.89 6.30 8.63 7.75 8.97
2009 8.74 8.00 8.24 6.82 9.09 8.49 9.34
2010 9.17 8.07 9.09 7.22 9.21 8.77 9.83
2011 9.45 8.09 10.46 9.04 10.90 9.32 10.74
2012 9.78 8.95 11.27 12.35 12.11 10.08 11.30
2013 10.17 9.12 11.96 11.65 13.36 10.58 11.59
2014 10.38 9.07 12.35 13.50 13.83 10.81 11.78
2015 10.89 9.02 12.84 13.36 11.87 10.60 12.11
Data source: Calculated based on statistics from China Statistical Yearbook and the Statistical Year Book
of 5 autonomous regions from 1995 to 2016.
Appendix 3
Comparison of Narrow MTB between EMRs and
Sub-National Localities Average (2000-2015) (Tax Revenue/GDP) (%)
Inner Mongolia Guangxi Ningxia Tibet
Total
Tax
Revenue
Tax Revenue
of Central
Government
Total
Tax
Revenue
Tax Revenue
of Central
Government
Total
Tax
Revenue
Tax Revenue
of Central
Government
Total
Tax
Revenue
Tax Revenue
of Central
Government
2000 9.46 4.19 8.58 4.08 10.41 4.28 6.76 2.06
2001 8.75 3.85 9.72 3.98 10.35 3.26 6.28 2.09
2002 11.03 4.16 9.43 4.73 10.31 4.49 6.05 2.31
2003 11.28 4.53 9.55 5.02 10.07 4.46 5.89 2.17
2004 12.55 5.55 9.59 5.16 11.24 5.34 5.66 2.09
2005 14.32 6.69 9.87 5.33 12.79 6.35 6.23 2.61
23
2006 14.80 6.95 10.00 5.43 13.13 6.52 6.31 2.78
2007 12.36 7.15 10.65 6.22 13.49 7.39 6.76 3.18
2008 12.23 7.05 10.33 5.89 13.45 7.26 7.48 3.65
2009 12.16 6.77 10.48 5.96 14.04 7.61 7.69 3.56
2010 13.33 7.39 11.13 6.30 15.06 8.01 9.88 4.94
2011 13.92 7.54 11.78 6.94 15.36 7.42 15.71 8.22
2012 13.99 6.96 13.08 7.19 17.36 8.39 21.60 11.63
2013 13.49 6.37 12.64 6.58 17.74 8.41 17.80 9.06
2014 11.69 4.71 12.63 6.37 17.32 8.10 18.54 9.24
2015 12.01 4.73 12.32 6.18 17.11 8.17 18.73 9.80
Xingjiang EMRs
Sub-National
Localities
Total
Tax
Revenue
Tax Revenue
of Central
Government
Total
Tax
Revenue
Tax Revenue
of Central
Government
Total Tax Revenue Tax Revenue of Central
Government
2000 10.95 5.99 9.49 4.56 12.09 6.64
2001 11.88 6.40 9.94 4.46 13.02 6.91
2002 12.30 6.62 10.57 4.95 14.05 7.25
2003 12.14 6.68 10.66 5.17 14.33 7.71
2004 13.97 8.39 11.57 5.98 14.65 7.97
2005 14.97 9.37 12.65 6.72 16.14 8.74
2006 15.82 9.92 13.10 6.97 16.78 9.01
2007 16.83 10.83 12.65 7.53 18.30 11.72
2008 18.41 11.78 12.80 7.55 18.11 11.35
2009 18.58 11.62 12.80 7.37 18.08 11.27
2010 20.10 12.56 13.91 8.00 18.74 11.61
2011 21.57 12.84 14.76 8.34 19.56 11.95
2012 22.21 12.74 15.59 8.30 20.50 11.78
2013 21.00 11.12 15.01 7.54 20.15 11.16
2014 20.46 10.75 14.23 6.77 20.12 10.98
2015 19.25 9.88 13.98 6.55 19.84 10.75
Source of Data: Calculated based on statistics from China Taxation Yearbook from 2000 to 2016.
Appendix 4
Tax Revenue Structure of EMRs %
Inner Mongolia
Domestic VAT
Business
Tax
Enterprise
Income Tax
Personal
Income Tax
Resource
Tax
2000 16.53 23.06 13.09 6.28 2.52
2001 17.65 23.33 18.08 7.93 2.40
2002 13.12 19.86 6.77 4.28 1.29
2003 14.00 22.52 4.44 3.37 1.25
2004 15.46 25.86 4.09 3.46 1.22
24
2005 16.26 26.26 6.50 3.38 2.23
2006 15.33 22.90 7.03 3.11 3.29
2007 23.60 34.47 12.50 5.26 4.99
2008 23.50 30.64 13.37 5.46 5.02
2009 20.85 32.39 14.24 5.65 5.24
2010 19.60 33.82 14.60 5.67 5.31
2011 19.63 30.95 17.03 5.87 6.20
2012 16.37 28.65 16.12 4.27 6.10
2013 15.47 29.30 12.89 3.73 5.86
2014 14.01 27.30 8.83 3.24 5.85
2015 12.77 24.21 7.75 3.40 8.02
Guangxi
Domestic VAT
Business
Tax
Enterprise
Income Tax
Personal
Income Tax
Resource
Tax
2000 23.05 31.79 16.51 11.32 0.87
2001 18.81 25.90 29.39 13.20 0.63
2002 20.07 31.45 10.95 8.84 0.69
2003 19.59 32.71 8.91 7.07 0.77
2004 23.25 41.32 10.22 8.27 0.95
2005 20.62 35.86 9.72 7.65 1.03
2006 20.83 35.99 10.43 6.54 1.12
2007 20.82 36.48 10.62 6.80 1.12
2008 19.00 35.20 10.74 5.62 1.19
2009 15.56 37.08 8.63 4.80 1.28
2010 14.51 38.86 11.04 4.84 1.31
2011 13.36 37.34 13.28 4.56 1.33
2012 11.12 34.40 11.27 3.17 1.34
2013 11.28 34.74 10.74 3.17 1.37
2014 12.93 32.85 11.18 3.09 1.75
2015 13.57 31.20 10.64 3.37 1.75
Ningxia
Domestic VAT
Business
Tax
Enterprise
Income Tax
Personal
Income Tax
Resource
Tax
2000 19.20 35.63 14.15 6.78 0.33
2001 16.44 32.11 25.66 8.45 0.30
2002 20.02 42.41 8.39 6.61 0.59
2003 20.65 44.65 6.88 5.33 0.53
2004 24.58 45.76 7.29 6.37 0.51
2005 23.72 42.81 7.09 6.03 0.62
2006 24.55 41.89 7.17 5.48 1.36
2007 24.15 39.21 7.74 5.97 2.14
2008 23.64 38.71 8.00 5.17 1.49
2009 18.53 42.96 10.22 4.96 1.66
25
2010 15.97 44.36 11.10 4.39 1.51
2011 13.78 45.23 13.65 4.23 1.55
2012 12.67 44.67 12.26 3.23 1.98
2013 13.42 44.52 10.89 3.11 2.11
2014 15.40 41.96 11.32 2.98 2.17
2015 13.94 38.95 9.58 3.50 5.19
Tibet
Domestic VAT
Business
Tax
Enterprise
Income Tax
Personal
Income Tax
Resource
Tax
2000 15.58 38.26 31.76 6.11 3.35
2001 15.86 42.16 24.25 8.58 3.54
2002 14.80 58.00 12.56 5.16 3.61
2003 14.37 61.47 11.01 4.43 3.06
2004 15.44 59.94 10.43 4.87 3.20
2005 14.48 59.75 10.92 5.52 2.94
2006 17.06 57.74 9.83 5.08 3.39
2007 17.91 55.18 10.71 4.97 4.28
2008 18.10 52.34 12.31 4.67 3.82
2009 15.34 54.40 11.35 3.94 2.70
2010 13.84 47.31 17.92 7.83 2.61
2011 11.30 34.91 24.55 17.67 1.77
2012 10.97 29.61 15.57 33.97 1.43
2013 15.05 39.31 17.49 16.05 1.36
2014 18.53 37.25 21.13 10.99 0.82
2015 18.85 45.23 12.50 9.22 1.04
Xingjiang
Domestic VAT
Business
Tax
Enterprise
Income Tax
Personal
Income Tax
Resource
Tax
2000 23.66 34.34 9.17 11.84 4.74
2001 23.93 34.74 12.85 13.54 5.65
2002 22.61 35.04 7.65 8.41 5.44
2003 23.94 37.87 4.97 6.03 4.41
2004 26.52 35.25 5.11 6.07 4.21
2005 30.10 33.42 5.31 6.53 4.26
2006 31.49 31.54 5.74 6.14 4.55
2007 30.19 30.92 6.37 6.94 4.29
2008 28.39 31.90 9.28 6.34 3.80
2009 19.14 37.32 9.32 6.71 4.08
2010 18.09 36.34 9.61 6.58 7.80
2011 16.30 35.36 10.69 6.46 10.96
2012 14.39 37.10 11.44 5.13 9.92
2013 14.42 36.99 10.29 5.22 8.68
2014 17.62 31.79 10.17 5.42 8.81
26
2015 16.33 30.77 10.72 6.45 7.70
Source of Data: Calculated based on statistics from China Taxation Yearbook from 2000 to 2016.
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