An OECD working paper titled “Tax policy and tax reform in the People’s Republic of China” was published on 9 September 2013.
The paper makes a comparison between OECD tax policies and those in China and looks at the ratio of tax to GDP and the tax mix in China. The paper concludes that the tax burden in China remains relatively low compared to those in OECD countries.
The paper notes that the business tax levied on services is currently being integrated into the VAT. Compared to the OECD average China raises more revenue from tax on property transactions and relatively less from recurrent taxes on immovable property. There is currently a property tax pilot program in Chongqing and Shanghai but this is a tax on the value of very expensive houses and apartments that is likely to yield relatively little revenue. Indeed the revenue from this tax may be less than the costs of administering the tax. The paper suggests that raising more funds from recurrent property taxes may also allow a reduction in property transaction taxes.
