China's Trapped Transition_ The Limits of Developmental Autocracy - Minxin Pei [115]
Declining rural income growth alone might not be sufficient to generate mass discontent. The most important source of tensions between the peasantry and the state is the onerous taxes and fees China’s most underprivileged social group is forced to pay.126 Officially, such taxes and fees, commonly known as “peasant burdens,” should not exceed 5 percent of the net income of farmers. In reality, local authorities have levied numerous illegal fees that greatly exceed the 5 percent limit imposed by Beijing. Because of the imposition of these illegal levies, none of which was reported or recorded in official statistics, it was difficult to determine the exact magnitude of the peasant burdens. At the low end of the estimates, according to data from the three hundred villages tracked by the Ministry of Agriculture in the 1990s, taxes and fees increased by 24 percent in the decade and amounted to 6.46 percent of per capita net income.127 According to one study by the State Administration of Taxation, taxes and authorized levies in 1996 were about 10 percent of rural GDP. If additional illegal fees and levies are added, the total effective tax rate, broadly defined, could be 20 percent of rural GDP that year, excluding the cash income from nonagricultural activities. 128 At the high end of the estimate, according to surveys conducted by the Ministry of Agriculture in one hundred counties in 1996, taxes and fees paid by each peasant were three times the official national limit, or 15 percent of their net income.129
In addition, such taxes and fees were highly regressive, both for individuals and regions, as poorer peasants and less developed regions paid a higher proportion of their incomes in such taxes and fees, mainly because such taxes and fees were levied on a per capita basis and became, effectively, poll taxes. The poorest peasants, with annual income of 400-500 yuan a year, had to pay almost 17 percent of their income in 1996 in assorted taxes and fees.130 Those earning 1,500-1,700 yuan paid 6.7 percent; those with incomes of 2,500-3,000 yuan paid 4.9 percent. The rate for those earning 4,500-5,000 yuan was a mere 2.8 percent. In regional terms, peasants in the wealthy coastal areas in the east paid 3.94 percent; those in the agrarian central regions paid 8.01 percent; and the rate in the impoverished western regions was 5.64 percent.131
Institutional changes and economic reform in rural areas have made taxes and fees extremely unpopular for several reasons. The replacement of collective agricultural production by household farming has severed the economic links between local governments and peasants, who have gained autonomy in their economic and social lives. On a daily basis, the government plays practically no visible role in the economic activities of peasants. Politically, the prospects of political advancement through membership inside the Communist Party are dim, and rural residents do not rely on the ruling party for their political welfare. In other words, the government and the ruling party have become almost irrelevant to peasants engaged in household farming. Such irrelevance makes taxes and fees, especially those levied for projects outside local communities, illegitimate.
What has further irked the peasantry is that their high taxes appear to have brought in return few government services, such as public health, education, and agricultural infrastructure. The combination of high and regressive taxes, heavy-handed collection efforts, and inadequate provision of public goods has turned a large portion of