Thammasat University students interested in economics, development studies, business, banking, law, political science, China studies, sociology, governance, and related subjects may find it useful to participate in a free 16 September online Zoom Webinar Book Talk on Governing and Ruling: The Political Logic of Taxation in China.

The Zoom event, on Friday, 16 September 2022 at 7:30pm Bangkok time, is organized by the  Faculty of Law and Centre for Comparative and Public Law of the Department of Law, University of Hong Kong (HKU).

The TU Library collection includes several books about different aspects of taxation in China.

The main speaker at the event will be Professor Zhang Changdong, who teaches political science at Peking University, the People’s Republic of China. His book, Governing and Ruling: The Political Logic of Taxation in China, is available to TU students through the TU Library Interlibrary Loan (ILL) service.

The commentator at the event will be Associate Professor Angela Zhang, who teaches at the Faculty of Law, The University of Hong Kong (HKU Law).

The event description follows:

Rapid social economic changes, the transition from a planned economy to a market economy, or even economic liberalization can lead to political instability and the collapse of authoritarian regimes. Despite experiencing all of these unprecedented changes in the past forty years, China under the Chinese Communist Party’s leadership has so far successfully transformed and improved both its governance capacity and its ruling capacity. Governing and Ruling addresses this regime resilience puzzle by examining the political logic of its taxation system, especially the ways in which taxation helps China handle three governance problems: maneuvering social control, improving agent discipline, and eliciting cooperation. Changdong Zhang argues that a taxation system plays an important role in sustaining authoritarian rule, in China and elsewhere, by combining co-optation and repression functions. The book collects valuable firsthand and secondhand data; studies China’s taxation system, intergovernmental fiscal relationships, composition of fiscal revenue sources, and tax administration; and discusses how each dimension influences the three governance problems.

The event chair will be Assistant Professor Benjamin Chen, HKU Law.

Students are invited to register at this link:

https://hkuems1.hku.hk/hkuems/ec_regform.aspx?guest=Y&UEID=83379

With any questions or for further information, please write to

pxto@hku.hk

Here are some reviews of Governing and Ruling: The Political Logic of Taxation in China:

“This groundbreaking study provides a stimulating account of regime resilience in contemporary China by focusing on the relationship between state institutions and revenue collection. Changdong Zhang convincingly demonstrates how institutional arrangements combine to enable the Chinese Party-state to balance between revenue extraction and economic growth and social stability. This well-researched and analytically provocative work is a major contribution to the literature on authoritarian politics.”

—Yongshun Cai, Hong Kong University of Science and Technology

“Governing and Ruling provides a much-needed analysis of taxation and regime maintenance in contemporary China. Drawing extensively on the literature in political science and economic sociology on taxation, this book offers a fresh analysis of how taxation shapes the CCP’s strategy of rule that makes important contributions both to Chinese political studies and to the comparative literature on the political economy of regime survival.”

—Thomas Pepinsky, Cornell University

“Does taxation lead to representation? Not necessarily, argues Changdong Zhang. Zhang identifies various mechanisms through which taxation affects the stability of the Chinese state, the most interesting of which is the suggestion that raising taxes to a level so high that taxpayers must evade them can produce fear and quiescence rather than criticism of the party. This book should launch a new research tradition on understanding the relations between fiscal sociology and authoritarian politics.”

—Monica Prasad, Northwestern University

“We know far too little about how taxation actually works in authoritarian regimes in general, and in China in particular. Drawing on an impressive range of theoretical literature and multiple types of evidence, Changdong Zhang argues that taxation poses a host of political and economic dilemmas to China’s long-ruling CCP. His emphasis on revenue instruments that social scientists all too often ignore, such as indirect taxes and state-owned enterprises, produces sophisticated new insights into how taxation shapes authoritarian governance.”

—Dan Slater, University of Michigan

Earlier this month, Bloomberg News reported on taxation in China:

China has not introduced a digital services tax, nor are there any value-added tax rules specifically targeting economic activities in the digital space. The general rule remains that VAT applies if either the supplier or the recipient is in China, unless the relevant services are completely consumed abroad or are exempted or zero-rated. There remains a lack of guidance on the application of the VAT rules to the e-commerce sector.

Substantively, an issue is whether digital services provided to a Chinese recipient by a foreign service provider may be considered to be “completely consumed abroad” and hence not subject to VAT, given that the current rules were drafted in the context of pre-digital era services with clearer physical presences. In practice, digital services provided by a foreign service provider are normally not considered to be completely consumed outside China if the service recipient utilized the services while physically present in China.

Foreign service providers, including foreign digital services providers, are required to register in China. However, this requirement has not been strictly enforced except for construction services. Therefore, China relies heavily on the general VAT withholding regime to collect VAT payable by foreign digital services providers, which imposes a withholding obligation on Chinese service recipients. VAT withholding is generally not an issue in cross-border business-to-business digital service transactions. However, for business-to-consumer transactions, the withholding rules are difficult to enforce against individual consumers in China. Also, the rules do not impose a specific obligation on e-commerce platform operators to withhold VAT chargeable on digital services provided by foreign service providers via the platforms.

Having said that, the Chinese government has been tightening its scrutiny of e-commerce platform operators and other technology companies. Although not specifically related to indirect taxes, in 2021, the State Administration for Market Regulators issued measures to enhance supervision over the digital economy, which would enable tax authorities to cross-check data. In 2022, the Cyberspace Administration of China, State Taxation Administration and SAMR jointly issued measures to regulate profit-making online live-streaming activities, with mandates on tax collection and enforcement.

Looking ahead, China may introduce tax reforms to provide more certainty about the taxation of the digital economy.

(All images courtesy of Wikimedia Commons)