China’s Constitutional Transition In The Dimension Of Taxation

Taxation is not only the necessary material base for the operation of power, but is a very important mechanism for the construction of the modern Nation-State. It is the rational basis for governance and contains the belief of Check and Balance. Taxation also influences largely the Constitutional transition of a state. Since the late Qing Dynasty, China has been engaged in extraordinary efforts of modern political transition, while the tax system to a considerable extent determines the effectiveness. We can argue that the changes of tax system reflect and at the same time determine the level of China’s Constitutional development and modern political civilization as well. To demonstrate this proposition, concerning the two main lines of the political ethic and the relationship between the central and the local, the general framework of the article are as follows:Chapter 1 defines those concepts related to Constitutionalism and taxation, and overviews some relevant research findings, and explains the research methods in detail.Chapter 2 argues that the concept of "tax" must be placed in the political framework. The essence of modern taxation is a "contract" between people and government. It embodies the elements of "equality" and "consensus" and contains the belief of Check and Balance. Citizens as creators of wealth should enjoy property rights. Taxation means respect and safeguard of property. Property is the foundation of citizenship. The power to tax in the sense of law belongs to the people, to the extent that it makes up the necessary public costs. Tax-state is a Constitutional imperative.Chapter 3 describes the evolution of China’s political ethics from the perspective of taxation, and evaluates the current tax burden. The level of China’s Constitutional development is still lower than that under democracy. The view that taxation should be the social contract in the late Qing Dynasty is an important motive of Constitutional Movement. And that it couldn’t prevail the view of tax as "protection money" maps the ups and downs of China’s Constitutional fate. After 1949, China established the modern Domestic-asset Finance. The tax system existed in name only. Modern Domestic-asset Finance made the government not rely on taxes. On the contrary, the state engulfed society and had firm control of the individuals by the "unit" system, forming new relations of personal dependence and undermining the base of citizenship. So socialist "Constitutional implementation" was doomed. With the revival of the tax system, the gradual separation of state and society, China has the Constitutional re-development. 82 Constitution established the basic form of modern political civilization, but the study of macro tax burden reflects the actual political ethics, indicating that the level of Constitutional development is still very low. In a sense the government is an exploiter. This is not only because the taxation accounts for a small part of government total revenue, but also because of the indirect tax structure. The prospect of China’s Constitutionalism is determined by the development of the sense of citizenship in the mass. The direct tax, especially Individual Income Tax, may promote the sense of citizenship. And 82 Constitution also provides a corresponding system space for China’s Constitutional development.Chapter 4 describes the changes of China’s Central and Local relationship from 1978 up until now. China is not a typical unitary system and there should be Local Governance according to 82 Constitution. But the reforms of tax system, especially fiscal transfers, alienate the regulations of 82 Constitution. Since 1994, the tax system reform, especially fiscal transfers, has strengthened centralization, influenced the Constitutional structure of Local Governance, and interfered with the delicate balance in the Constitutional framework. And its roots still lie in the internal tension of the Constitutional framework, which indicates that the system design flaws can be amplified by means of tax system.In the end, the thesis demonstrates the reason why Constitutionalism encounters so much difficulty in China is that there are controversies of "civil reason" and "reason of state". How to resolve the problem is to determine whether China can truly achieve modern political civilization.