OUTLINES TAX-COLLECTION METHODS IN PORT ARTHUR-DAIREN AREA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600310652-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: August 12, 2011
• Sequence Number: 652
• Publication Date: June 2, 1950
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600310652-3
CENTRAL INTELLIGENCE AGENCY REPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD ~:0.
CLASSIFICATION coxFlDErrrIAL ~~t~4~~3~~~~~~~
COUNTRY China
SUBJECT Economic - Tax Collection
HOW
PUBLISHED Daily newspaper
WHERE
PUBLISHED Peiping
DATE
PUBLISHED 9 Apr 1950
LANGUAGE
or rra arms nano r~mr *ra runty o...~o....... ..
r. a. e., ai aro u. u arnoaa. m nuunaror o[ na maunw
or m coanrn ~r an uua[ m ~r orarnoo:u nasor a rro?
arras n u~. nnroaarnor or tra rorr a norirns.
SOURCE Ten-min Jih-pao.
DATE OF
INFORMATION 1950
GATE DIST. Z Jun 1950
N0. OF PAGES 3
SUPPLEMENT TO
REPORT N0.
THIS IS UNEVALUATED INFORMATION
Considerable progress has been made in improving tax collection in the
Port Arthur-Dairen area. A description of the system follows.
1. From ten to 20 firms are grouped into one small block and four small
blocks into one large block. Block leaders are democratically elected by the
firms and approved by the tax office. They are chosen from among the medium-
sized or small firms and may even be shop employees. The period of service
depends upon their efficiency. Changes may be made if the firms or the tax
office decide the service is not satisfactory. The duties of the block leader
are to assist in collecting taxes, to issue and receive the business reports
from the firms in their block, prompt slow taxpayers, investigate tax leaks,
propagandize the tax law and collection system, and give aid in understanding
the accounting system, etc. Their service has been effective in smoothing re-
lations between the tax office and business firms. This is called the block
system. Tax cadres may be chosen from among promising shop workers.
2. Since 1948, the use of uniform account books has been required; these
consist of a cost book and ,journal, and a stock record book where needed. In
addition, a firm may have additional account books, but must register them with
the tax office. Very small businesses need only use a small cash book. These
account books are printed by the tax authorities and issued to the firms, after
registration at the branch tax offices. This plan has the advantage of con-
venience in inspection to guard against false accounts and tax evasions. It
is also a convenience in figuring income taxes.
3. Since June 1949, all large business houses and from January 1950, all
factories, business houses, and shops except the smallest outdoor stands, bar-
ber shops, bathhouses and similar special-type businesses, have been required
to use a uniform type of sales slip for each sale. This form of sales slip
has a stub for permanent record. This makes work of tax inspectors much easier
and prevents unrecorded business transactions. This system of uniform sales
slips can be best controlled by having: (1) a special form for each type of
business; (2) forms printed by one printing house and distributed by the tax
bureau; (3) the members of each block group mutually assume responsibility to
see that the plan is carried out in their block group, (4) the people to ex-
pect and call for sales slips, and (5) unannounced inspections by tax-office
representatives and police.
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4. ~tn the c~l].ec+,ion :~yst~;ri, two inspector cadres are paired together;
one is very f~niliar with business practice and the othrr xith tax-collection.
Each team is responsible far ten or more block groups of approximately 200
firms. These teEUU, ,re responsible for investigation, computation of tax,
exhorting payment, and reporting on changes in economic conditions in their
areas, as well as secaking to strenEthen the unity of the masses of all classes
and development of prevention of clandestine operations. Some teams already
have a thorough understanding of the situation in their areas and can make
their computations on a thoroughly intelligent basis. They have had responsi-
bility fo^ good results from inspection to collection placed squarely upon
+.i;em and the sense of responsibility of the cadres has been strengthened.
Businessmen no longer dare to juggle accounts in an attempt to avoid taxes.
Branch tax offices, by rewards for good collections and daily posting of col-
lection results, have built up high morale.
The above represents the system the Port Arthur-Dairen area government
has worked out for collection of business tax.
The practical application of the system is as follows;
1. The plan for collection of business tax is for the firms themselves
to ~1ake monthly reports and honest payments. Inspections are made afterwards.
T1ie ta;: bureau, through the medium of the block leaders passes out the monthly
business; activities report blanks to the firms to be filled out and returned
to the tar. bureau within 3 days. Tl~e cadre teams then figure the assessments
in triplicate and distribute them to the firms through the block leaders, who
then make payment at the barilc. During the period allotted For payment, the
cadre teams are busy encouraging prompt payments, checking on business condi-
tions of each firm, and securing information from the masses to aid them in
apprehending tax evaders.
2. Income tax is collected semiannually. It is computed largely by
taking into a;:count business expenses and inventories. The tax bureau not
only evaluates inventories but also has established principles governing busi-
ness expenses, otherwise net profits would be subject to variations and tax
income reduced. Income-tax collection methods have progressed to the point
where the authorities do not wait until after the firms have reported and paid
to inspect accounts. The cadre teams visit the firms, check up on the situa-
tion, assess the tax according to the accounts, and fill out the assessment
blanks after the firm has concurred in the figure.
The introduction of this modern tax-collection system was not without
its problems. For instance, the introduction of the universal use of sales
slips raised the question of illiteracy. This was overcome by night school
classes in reading, pasting printed name labels on goods to be copied in fill-
ing out sales slips, and the use of rubber stamps.
There was a question of how large a sale should be before a slip was re-
auirFd. After some experimentation it was decided to require them for all
sale;. The extra cost to the small helper, which was found to be about one
percent of his business turnover would be made up in increased income because
whereas formerly people were inclined to disregard paying a few odd cents on
a bill, with the new system the amount taken in must match the amount of the
sales slip. There was also the problem of itinerant salesmen and individuals
selling personal property. This was also overcome by various devices.
It ?.:...: also necessary, in introducing the new uniform account books, to
open classes fpr block leaders who iri tux?n taught the various firms in their
blocks.
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This new modern system has resulted in better control with reduced per-
sonnel. Now, 133 tax-collection cadremeu care for the monthly collections with
little difficulty in the whole area with more than 11,000 firms; whereas, form-
erly, more than 200 collectors were required for Dairen alone with slightly
over 7,000 firms. Moreover, in those days the collections were made only quar-
terly. Collections have improved and evasions are fewer.
The three taXPS levied in the Dairen-Fort Arthur area -- business tax, in-
come tax, and revenue tax (on salt, tobacco, liquor and soft drinks) -- were
more than 9 percent of the capital wealth of the are.
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