Increase local tax revenues (China Daily) Updated: 2004-08-02 16:55
Local financial revenues
should be increased to prevent officials from colluding with coal mine owners,
according to an article in China Youth Daily. An excerpt follows:
It was reported that recently, in Central China's Hunan Province, a local
coal mine accident killed 16 people. An investigation shows that the main reason
for the accident in that city, which has seen some accidents before, was local
governmental officials' protection of the coal mine owners, with some officials
even owning shares in those coal mines.
To prevent such tragedies, collusion between officials and coal mine owners
should be strictly controlled and cracked down upon. Officials receiving bribes
must be punished.
But why are local officials and coal mine owners engaged in such collusion?
Officials do personally benefit from bribery. But in some cases, they may
also want to add to local revenue by allowing unsafe mines to operate.
The amount of bribes officials received is not astronomical. And the city
where the coal mine accident happened is poverty-stricken. The local annual
financial expenditure of 160 million yuan (US$19.3 million) could not make ends
meet. To raise more funds, some officials violated the law and regarded local
mines as their tax sources.
The 1994 tax reform, which re-allocated tax revenues between central and
local governments, became a watershed for local revenues. Before, local revenues
accounted for 70 per cent of total national revenues. After the reform, their
revenues were chopped to 48 per cent.
In addition, 70 per cent of all the nation's government officials are at
county and township levels, while they carry out their duties depending on only
40 per cent of the total revenues. Meanwhile, the fiscal transfer from the
provincial and municipal levels to county and township levels is not enough. The
financial difficulties of counties and townships have been intensified.
To pool money for their maintenance, some local governments have to collect
huge fees from local residents and enterprises.
The aforementioned city has limited tax sources. Under the financial
pressure, some local officials have colluded with coal mines, resulting in a
series of legal violations.
In this way, although the officials involved in this accidents have been
punished, it is hard to say whether similar legal violations will not occur if
local governments continue to operate with inadequate
revenues.
