CCP REVISES TAX RATES AND PROCEDURES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600340763-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: August 16, 2011
• Sequence Number: 763
• Publication Date: September 21, 1950
• Content Type: REPORT

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CLASSIFICATION CONFIDENTIALCON" ERRAL
CENTRAL INTELLIGENCE AGENCY REPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
SUBJECT Economic - Finance
HOW
PUBLISHED Daily newspapers
WHERE
PUBLISHED China
DATE
-PUBLISHED
LANGUAGE
THIS DOCONINT CONTAINS INFORMATION AFFECTING THE NATIONAL DEFENSE
OF THE UNITED STATIS WITHIN THE MEANING OF ISFIONASI ACT DO
A. S. C.. SI AND SOAP AMENDED. ITS TEANSMISSI0N OR THE NIYILATION
OF ITS CONTENTS IN AMY SASHES TO AN UNAUTHOIIEEO PINION IS PRO-
HIUITID BY LAW. REPRODUCTION OF THIS FORM IS PROHIBITED.
DATE OF
INFORMATION 1950
DATE DIST. Z/ Sep 1950
NO. OF PAGES 6
SUPPLEMENT TO
REPORT NO.
THIS IS UNEVALUATED INFORMATION
EDITOR DISCUSSES TAX ADJUSTMENTS -- Wu-hsi Su-nan Jih-pao, 14 Jul 50
This editorial was reprinted from the Peiping Jen-min Jih-pao.
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The problem of tax adjustments has recently engaged the attention of high
government officials, as evidenced by a directive from Mao Tse-tung, a special
revenue conference called by the Central Government's Ministry of Finance and
the Committee of Finance and Economics, and reports to the second session of
the National Committee of the CPPC by Chen Yun and Po I-po. As a result, on
31 May 1950, the Government Administration Council promulgated a decision on
the 1950 summer public grain levy in newly liberated areas, on 31 May the Com-
mittee of Finance and Economics reduced the salt tax, on 29 June the same com-
mittee announced revisions in tax collection, and other pronouncements are ex-
pected in the near future.
These actions have brought about the following changes:
1. The people's burdens have been lightened. The public grain levy in
newly liberated areas has been reduced 4 percent over the preceding autumn,
from 17 to 13 percent, or, includipg local taxes, from 20 to 14.95 percent,
and the salt tax has been reduced 50 percent.
2. The commodity tax has been reduced and simplified. There are now 358
categories instead of 1,136.
3. The industry and commerce tax has undergone appropriate changes.
Various collection procedures have been brought into harmony. Based
on Article 40 of the Common Program, two main principles may be cited as form-
ing the basis for tax adjustments at present: (1) strengthening measures de-
signed to balance the budget, and (2) emphasizing economic recovery and develop-
ment:
STATE
ARMY
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There are some who are satisfied with the new arrangements, others feel
that the cuts are not deep enough or are too deep and threaten a deficiency in
receipts. There are also speculators who see, in the reductions, financial in-
stability with its resulting inflation.
Admittedly there are difficulties, but a budgetary balance can still be
maintained. Although a cut was felt to be necessary to lighten the people's
burden, the deficit may be offset by a corresponding saving in expenditures,
accompanied by more stringent tax collections. Tax evasion or failure to com-
plete collection quotas based on the new rates must therefore be carefully
avoided.
The continued presence of disruptive and speculative elements may be seen
by the rise in prices of import goods, such as rubber, sugar, Western medicines,
gasoline, and gold, after the aggressive statements of Truman on 27 June 1950.
Fortunately, however, this rise failed to affect the price of essential mate-
rials and may be again brought into line by the government within a short time.
The second principle, emphasis on production, is the basic objective of
present tax-collection activities. This emphasis is shown in the nature of the
taxation. The agricultural tax, for example, is applied only to primary prod-
ucts, and not to farm industry and animal husbandry, in which development is
desired; it was reduced from 17 percent to 13 percent to encourage production;
and it is calculated on the basis of a standard output, and collected on that
babis despite actual production, thus rewarding zealous farmers who produce
beyond the mark and placing limitations on the nonindustrious. Total exemption
from the provisions of the commerce tax are also allowed for the marketing of
the products of home and farm industries in rural areas and for the marketing
of fish products, which serves the purpose of encouraging urban-rural exchange
of goods.
With regard to the industry and commerce tax, the readjustment has con-
tinued the policy of applying a light tax on the producers of consumers' and
capital goods. The tax was remitted entirely on many items and reduced on
others.
To encourage the export trade, many items which have had low sales abroad
are being granted tax refunds. Domestic consumption is also being encouraged
by tax reduction in many basic articles.
The income tax has also been lowered, so that a levy of 5 percent now ap-
plies to a minimum income of 3 million yuan instead of one million. The maxi-
mum of 30 percent also applies now to 100 million yuan, instead of the previous
30 million yuan.
In addition, a policy of aiding private enterprise has been adopted, and
encouragement has been given to private ownership.of property by reduction in
house and property taxes.
These and other measures concerned with accounting, assessment, and col-
lection procedures have proved to be more effective than procedures previously
in force, especially in regard to tax evasion in urban areas, which was wide-
spread during the first part of 1950.
To enforce tax collection operations more strictly, all large cities have
established, or are now establishing, tax review committees, consisting of
delegates from the revenue bureaus, industry and commerce bureaus, and joint
commerce and industry associations.
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CCP ORDERS TAX ADJUSTMENTS -- Wu-hsi Su-nan Jih-pao, 1 Jul 50
Peiping, 30 June (Hein-hua) -- The following tax adjustments were ordered
by the Finance and Economics Committee of the Government Administration Council
to take effect throughout China on 1 July 1950. The order resulted from approval
of tax-revision reports by Ch'en.Yun and Po I-po to the second session of the
National Committee of the CPPC and from requests from various localities. Other
revisions are pending action by the Government Administration Council. Adjust-
ments to take effect 1 July are as follows;
A. Direct Taxes
1. The provisional commerce tax will be computed on a ratio of 5 percent.
Firms with a volume of business under 200,000 Yuan are exempt. Merchants with
fixed establishments who sell goods at outports may pay their tax at the place
of sale at the rate for fixed merchants if they have a special certificate from
the revenue bureau of the city of origin.
2. The tax on income from interest is set uniformly at 5 percent for both
public and private banking enterprises.
3. Stamp Tax
a. Documents taxed according to the cash value involved, or at a fixed
rate, shall be uniformly exempt if the value is less than 15,000 Yuan, except
tickets for amusement or entertainment.
b. All commercial invoices, except those taxable according to value,
and receipts for money or goods, shall be liable to a fixed tax of 500 yuan;
cash receipts must also bear the invoice date, number, amount of goods, and
price.
c. Receipts for the payment of wages are exempt from provisions of the
stamp tax.
d. Permits, licenses, passports, identification certificates or cre-
dentials, marriage certificates, and birth certificates shall be exempt from the
stamp tax.
B. Commodity Tax
1. Changes in the tax schedule are as follows:
a. Exempt -- steel; domestic niter; earthenware; rugs and carpets,
clocks, watches and parts; fountain pens and parts; phonographs and parts; ciga-
rette lighters; automobiles and parts; lime; whitewash; handmade bricks; tiles;
candle wax; hides; syithetic hides; metal cans; and needles, representing alto-
gether 238 types of goods.
b. Partially exempt -- silk scarves, bandanas, handkerchiefs, silk
lace, linens, raw wool, bristles, rabbit fur, Industrial soap, fish oil for
chemical purposes, paint, rubber for chemical uses, unrefined alkalies for chem-
ical uses, sodium hydroxide., electric irons, refrigerators, electric fans, elec-
tric stoves, various plant oils, arsenic, ceramic clay, silicon, feldspar, quartz,
mica, fire clay, heavy crystal, magnesia, toys, etc., amounting to a total of 74
types of goods.
Under the general category of partial: exempt goods, the following
items will not be subject to tax: all metal nails (16 types), with the excep-
tion of foreign nails; 26 types of rubber goods, excepting belting, tire tubes,
shoes, soles, tubing, rubberized cloth, mats and battery cases; 33 types of bicycle
parts, excluding wheels, steel rims, sprockets, axles, handles, frames, chains,
seats and pedals.
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2. Goods Merged With Other Tax Categories
a. Thirty-three types of woven cotton articles are exempt from that
category and placed in the category of cotton yarn, which shall be taxed at a
rate of 15 percent.
b. Twenty types of woven woolen articles are exempt and placed under
the wool yarn category, which shall be taxed at a new rate of 20 percent. Rough
wool yarn used for rugs and carpets shall be taxed at a rate of 10 percent.
c. Thirty-four types of cured hides are exempt and placed under the
raw hides category. Class A raw hides shall be taxed at a new rate of 15 per-
cent, Class B at 10 percent.
3. Goods Taxed at Reduced Rates
a. Cigarettes -- Originally taxed at a uniform rate of 120 percent,
cigarettes shall now be taxed according to price, taking factory or initial
wholesale prices as the standard. Cigarettes valued at 7 million Yuan per
case or more shall.be considered Class A, at a rate of 120 percent; 3.5 - 7.
million yuan, Class B, 110 percent; 1.5 - 3.5 million yuan, Class C. 100 per-
cent; all others, Class D, 90 percent.
b. Cigars -- Rate reduced from 120 to 100 percent.
c. Foreign liquors -- 120 to 100 percent.
d. White and yellow wines -- 100 to 80 percent.
e. Fortified wines -- 120 to 50 percent.
f. Cordials and beer -- 60 to 50 percent.
g. Medicinal alcohols -- 60 to 30 percent.
h. Denatured alcohol -- 100 to 30 percent.
i. Metal cans -- 30 to 20 percent.
~. Matches -- 20 to 15 percent.
k. Chemical alkalies -- 10 to 5 percent.
1. Firecrackers -- 30 to 20 percent.
in. Lead.and sulfur -- 10 to 5 percent.
4. Tax Rebates on Export Goods
The commodity tax already paid on export goods shall be refunded on
those items which have been granted exemption.
C. Local Taxes
1. Stock Exchange Tax
This tax shall be levied only on markets operated by brokers. Public
enterprises, cooperatives, fixed commercial establishments, and other businesses
not conducting their operations through brokers shall be exempt.
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2. House Property Tax
Those liable under regulations pertaining to the first half of 1950
shall be taxed according to original local provisional measures; those liable
under the second half shall await new regulations.
3. Special Consumer Taxes
a. Banquet tax -- The minimum expenditure to which the tax applies
has been changed'to 50,000 yuan, and includes payment for vegetables and meats,
liquors, rice, flour and pastries.
b. Hotel tax -- The minimum expenditure has been changed to 30,000
yuan, including room and board.
This taitshall not be levied on any person, government agency, troop
unit, or popular organization which rears, slaughters, and consumes domestic
animals for his or its personal use.
5. License Tal
The same arrangements shall apply as for the house property tax.
NATIONAL CONFERENCE PROPOSES TAX ADJUSTMENTS -- Yang-chcu Su-pei Jih-pao, 2 Jul 50
Peiping, 30 June (Hsin-hua) -- The second National Revenue Conference, which
adjourned 17 June 1950 after a 20-day session, decided that tax adjustments and
revisions were necessary to meet new economic conditions and to accord more
closely with the tax policy outlined in the Common Program. The conference was
attended by delegates of local revenue bureaus and industry and c% merce.
The conference lauded'such past achievements as nearly balanced budgets
and price stabilization, but scored past defects and mistakes. At the same time,
delegates recognized that a lightening of the burden of industry and commerce
would be impossible now in view of present economic conditions, except for cer-
tain enterprises which are experiencing great hardships.
NINGPO CARRIES OUT TAX ORDER -- Ningpo Yung-chiang Jih-pao, 4 Jul 50
The order of the Central Finance and Economic Committee to all local govern-
ments to adjust the industry and commerce tax, as of 1 July 1950, has been trans-
mitted successively through the various levels for implementation. The Revenue
Bureau of the Ningpo Special Distr+ct was notified by the provincial bureau and
transmitted the notice to the vari.,us hsien bureaus and tax collections stationed
at factories, and also to municipal chambers of commerce, trade guilds, and
public enterprises.
The S*ntung government has promulgated regulations governing the summer
grain levy in new and old liberated areas. The following is a study of the
agricultural tax as applied to old liberated areas in Shantung:
The basic portion of the regulations is concerned with the question of
tax rates, which have been made dependent on the amount of land in.each house-
hold that will harvest in the summer season. If the, amount to be harvested is
up to 20 percent of total acreage, the rate per taxable mou-(harvestable mou
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lees exemptions) is 3 catties. For every additional 25 percent of total acre-
age subject to tax, the rate is increased by 6 Jiang [Chinese ounce7 to a
limit of 10.5 catties per taxable mou at 'TO percent of total acreage.
The tax rate outlined above was determined on the basis of 13 percent of
the total amount of the summer harvest in the entire province, and then pro-
rated on the average land holdings per individual, less exemptions. Statisti-
cally, the average is 2.3 mou per person, from which is deducted 0.7 mou per
person in the form of exemptions, leaving 1.6 mou. It is supposed that the
acreage to be harvested in the summer is 20 percent of the total, or 0.46 mou.
According to the regulations, the yield per mou is fixed at 80 catties, so that
36.8 catties in this case would be taxable. At the general rate of 13 percent,
the amount would be 4.784 catties. Since the tax rate is based on the amount
of taxable mou, however, it is necessary to.divide this amount by the 1.6 tax-
able mou, which leaves 2.99 catties. This is the amount due per dutiable mou
and for tax purposes has been rounded off at 3 catties.
Since exemptions are progressive in old liberated areas, the uniform rate
of 13 percent does not apply, but is modified as follows:
Av mou per person
1
2
3
4
5
6
Dutiable mou
0.3
1.3
2.3
3.3
4.3
5.3
Summer harvest land (%)
40
40
40
40
40
40
Summer harvest amount (catties)
32
64
96
128
160
192
Dutiable amount (catties)
1.8
7.8
13.8
19.8
25.8
31.8
Percentage
5.6
12.2
14.3
15.4
16.1
16.6
Thus, although each person is allowed a 0.7-mou exemption, tax responsi-
bilities are not equal. The Central government provision that the total levy
may not exceed 13 percent is not violated, however, because the Central govern-
ment law stipulates that the total amount taxed is based on the regional dis-
trict as the unit of computation, and. not the individual household. . A fair
adjustment has been made in which the burden has been lightened on those fam-
ilies whose land holdings per person is comparatively small.
COPFIDEPTIAI'
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