Global circulation and local adaptation of tax models: business tax in China, 1931–1949

ABSTRACT

In light of certain conceptual constructs in comparative taxation, this study examines how Chinese tax reformers chose and adopted a particular form of business tax from a variety of tax models and how they justified and implemented the new tax in the political-social-economic conditions of early twentieth-century China. By illustrating a ‘hybrid tax transplant’ at discursive, institutional, and operational levels, or in terms of justification, design, and enforcement of business taxation, it presents a case study of global circulation and national/local adoption and adaptation of a tax model in a changing tax culture in China. The study reinforces the relevance and usefulness of these concepts to historical analyses and interpretations of taxation studies in different countries and offers a comparative case for research in other contexts.

KEYWORDS:

• Chinese business tax
• comparative taxation
• tax model
• tax culture
• hybrid tax transplant

Acknowledgements

The authors would like to thank the editor, Cheryl S. McWatters, and three anonymous referees, for their comments and suggestions on an earlier version of this paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 The symbol ‘¥’ is used in this article to denote the Chinese currency ‘Yuan’ during the Republic of China (1912–1949).

2 For the US discourse, see, e.g. Millis 1908; Adams 1917; Buehler 1936; Hunter 1936; Studenski 1940; Webber and Wildavsky 1986, 420–421; Murnane 2004.

3 ‘Tax culture’ can also refer to the culture on the part of taxpayers in terms of tax compliance or tax avoidance (Bergman 2003, 617), which is not the focus of this study.

4 In this article we translated quotations directly from Chinese sources and we are responsible for their accuracy.

5 The primary sources on the Sichuan Province Business Tax Bureau are the journals published by the bureau and other tax agencies in the 1930s–1940s. These journals were intended for tax personnel and business leaders/owners (tax payers) to read. They would publish and explain or justify new tax laws and tax policies, as well as regulations on accounting methods related to taxation; discuss problems and how to deal with them in tax assessment and collection; and publicise the operations and the results of the tax agencies’ work, in a spirit of transparency. As such, they constituted the open archives of the tax reform.

6 Separate taxes other than business tax on certain businesses were still in existence. In August 1936, the Sichuan provincial government, following the Ministry of Finance directives, issued the ‘Provisional Regulations on Collecting Tobacco and Alcohol Public Sales Fees’ (SG August 1936, 1–8). There was also a ‘tobacco and alcohol license tax’ that belonged to provincial revenue starting in 1935 and it would end in 1942 (Sun 2003, 387–388).

7 The issue of government fiscal policy and wartime inflation is beyond the scope of this analysis.