Chinese Tax Collectors Ramp Up Efforts Amid Budget Shortfalls

Chinese authorities are pursuing unpaid taxes from companies and individuals dating back decades to address budget shortfalls and a growing debt crisis. Over a dozen listed companies have been hit with millions of dollars in back taxes. This effort aims to rectify local finances that have been severely impacted by a property market downturn. Local government debt is estimated at up to $11 trillion, including amounts owed by off-balance-sheet local government financing entities.

The Communist Party has proposed over 300 reforms, including expanding local tax resources and improving debt management. Despite these proposals, experts are skeptical about the implementation of these reforms. The State Tax Administration has denied launching a nationwide crackdown on tax evasion. Meanwhile, the government has cut personal income, corporate income, and value-added taxes to stimulate economic growth and encourage investment. Economists warn that increased tax collection is essential for balancing budgets in the long run.