Forwarded Comment on Peng Dehuai’s Investigation Report on the Collection of Business Tax[1]

(February 1948)

The various localities have completely failed or very rarely made reports to the Central Committee on the content and results of their tax policies toward industry and commerce. Judging from the far from complete materials known so far, an extremely dangerous and destructive adventurist tax policy exists, which conforms neither to the correct economic viewpoint nor to the correct financial viewpoint. This adventurist policy must be corrected. It is hoped that all central bureaus and central sub-bureaus will seriously examine once the tax policy toward industry and commerce and report the results to the Central Committee.

[1] In his report of February 14 to the Northwest Bureau of the CPC Central Committee, with a copy to the Central Committee, Peng Dehuai stated: According to our approximate investigation in Yanchuan city, there are 13 business taxpaying establishments in the whole city, none of which employs any hired labor, all being small-scale peddlers. In 1947, the business tax levied on these 13 establishments was equivalent to 30 shi of fine grain. If collected according to this rate, the total goods of the 13 establishments would not be sufficient to cover the payment. In fact, only 9 shi were collected, accounting for about 60 percent of the total business profits for the whole year of 1947. In 1947, 80 percent of the tax collected was used for the office expenses of the tax bureau, and 20 percent was turned over to the higher authorities, while the grain and clothing of the tax personnel were still supplied by the public. Under such circumstances, from the financial viewpoint, it is certainly not worthwhile, and from the economic viewpoint, it is even more disadvantageous, as the market stagnates and surplus products cannot be exchanged. It is proposed that the collection of business tax be suspended for one to two years so as to restore the pre-war market.