On The Reform Of Administrative Charge System In China: Systematic Analysis, Scale Assessment And Policy Recommendations

The administrative fee-charging, as a social economic phenomenon has long existed both in and out of China. At present, administrative charge is becoming increasingly common, penetrating into all walks of life. For example, one has to pay the procedure fee to get a registered permanent residence, the road maintenance fee to drive on the road, the enterprise registration fee to get a factory to operate, etc. From the perspective of modern economics, the administrative charge has had some positive influence on optimizing the allocation of resources, reducing the negative external efficiency, compensating for the deficiency of public taxation. However, with the increasing variety of administrative charge one issue is becoming more eye-catching, i.e., the legitimacy of fee-charging. The co-existence of administrative monopoly and economic monopoly, the arbitrary expenditure of charged fee without regulation, the over expansion of charging scale, and the unending illegal charging all have contributed to the disorder of the administrative fee-charging system, stirred the correlation between taxation and distribution of national income, aggravated the burden of business entities as well as that of people, and thus had a good many negative impacts on social life. Therefore, it is of great importance to reform the current administrative fee-charging system with the introduction of taxation as substitution wherever possible, establishing a more effective revenue distribution system.Since the commencement of the Ninth Five-year Plan China has introduced the reform of taxation and administrative charge in order to purge the illegitimate charge not within the budget or deviating from regulation. The reform in taxation and administrative charge, although having undergone for many years, bears little fruit. Presently, all the trial reforms in taxation and administrative charge have almost gone in vain except for the reform in replacing additional charge for vehicle purchasing with vehicle purchasing tax and administrative charge with tax in rural areas; the latter two are still in process despite all the difficulties and obstacles. One possible explanation for the status quo is a lack of a clear understanding on replacing administrative charge with tax, a precise positioning of administrative charge, a clear and specific objective, and supplementary necessary measures. The policy orientation of replacing administrative charge with tax this thesis dwells on is a policy scenario which tries to meet the need of both theoretical research and practice. This thesis, based on the analysis of administrative charge, taking into account the status quo of finance, taxation, and administrative charge in China, makes a thorough research on the aforesaid issues. Furthermore, this thesis, from the study of national revenue system in some western market economy nations, suggests the possible ways of reform in administrative charge policy, the policy orientation and current objective of reform.The thesis research consists of five essential parts. First, the thesis, gives a brief introduction of its academic background, researching significance, as well as its writing method. Then from the perspective of public finance study and property right economics, the thesis defines administrative charge and taxation, analyzes the difference between the two, and expounds the structure, function and principles of administrative charge. Second, the thesis conducts a detailed analysis into the charge system of Chinese government. Upon the recollection of China's reform in administrative charge and the change of relative policy the thesis discusses the structure of China's administrative charge system and evaluates the scale of administrative charge in China by means of quantitative analysis. Third, The thesis analyses the Chinese government charging scale, illustrating the newly-formed characters of charging in China, i.e., 1) a fast increase of charge within financial budget, 2) a steady increase of charge beyond financial budget, 3) the respective percentage between the charges within and out of the financial budget going closer as compared with a wider dispersion between the two, 4) a decreasing percentage of the official charge in the overall financial budget, 5) the large scaled illegimate charge which is hard to control and make statistics; using way of computation matrix and factual analysis the thesis gives a brief introduction of the charging system in Jiangsu Province. Fourth, the thesis refers to the success in charging system in foreign countries and expounds on the necessity of reform in administrative charge in China. Fifth, the thesis raises the current objective for China's reform in administrative charge: i) canceling road-maintenance fee, substituting it with fuel tax, ii) canceling the charge of social security provision, substituting it with social security tax, iii) canceling charge of various education fee, substituting it with education tax, and iv) canceling the charge of environment protection fee, substituting it with environment protection tax. The thesis in this chapter, based on the analysis of the status quo and setback of the current administrative charge system, provides some specific proposals for administrative charge reform.