Garello, Pierre --- "The Road to Efficient Taxation in China" [2007] ELECD 237; in Eger, Thomas; Faure, Michael; Naigen, Zhang (eds), "Economic Analysis of Law in China" (Edward Elgar Publishing, 2007)

Book Title: Economic Analysis of Law in China

Editor(s): Eger, Thomas; Faure, Michael; Naigen, Zhang

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847200365

Section: Chapter 2

Section Title: The Road to Efficient Taxation in China

Author(s): Garello, Pierre

Number of pages: 26

Extract:

2. The road to efficient taxation in
China
Pierre Garello

1. INTRODUCTION1

The recent economic history of China is simply fascinating. During the
past 25 years, China's GDP has grown at an average annual rate of 9 per
cent, driving China to the top five world economies with a GDP per capita
of 1410US$ in 2005. What accounts for such a rapid development?
Institutional changes without a doubt. Indeed, during that period, The
People's Republic of China has engaged in profound reforms on almost
every front, from property laws (with a large programme of privatization)
to competition law, and has opened itself to globalization. Tax laws are no
exception to this rapid structural change. China has undertaken major tax
reforms in 1978, 1983, 1994 and 2004.
In 2004, total tax revenue in China hit 2.57 trillion Yuan (US$313 billion),
up 25.7 per cent on a yearly basis.2 Still, the share of tax revenue in GDP
has remained surprisingly low compared to OECD countries: in 1999, that
share was 13 per cent for China, compared to 27.7 per cent for OECD coun-
tries and 30.2 per cent for EU countries.3 This places China at a crossroad.
How can growth be further fostered? And what use should be made of the
proceeds from growth? Some analysts plead in favour of greater fiscal cen-
tralization and higher taxes, while others point in the opposite direction.
The purpose of this study is to rely on ...