4 - Institutional Sources of Informal Tax Burdens

Summary

WHY were many of China's farmers subjected to financial burdens to the point at which some were driven to suicide and others to violent protest? In this chapter, we look for the underlying causes in the institutions and structures of China's political–administrative system. We identify five structural sources of peasant financial burdens: the vertical and horizontal deconcentration of power; performance pressures on local cadres and officials; state sprawl–the costly expansion of the bureaucracies down to the townships; muddled finances at the township level; and deeply embedded opportunities to engage in corruption. Some of these were strongly influenced by Maoist legacies. Others were based more specifically in the financial system. This chapter demonstrates the extent to which inadequate state capacity rooted in changing and deteriorating institutions was at the heart of the burden problem.

DECONCENTRATION OF STATE POWER

The norms of the PRC's political–administrative system prized unity of purpose and action in accordance with the top leaders' policies and instructions. Functional ministries at the central level were responsible to the Party Central Committee and the State Council and to their coordinating groups. Below Beijing, there was a dual vertical chain of command of Party and government from province down to township. Government agencies reported to their respective superior agencies as well as horizontally to their corresponding Party and government leaders, and, most important, to the territorial Party committees.