The Party: The Secret World of China's Communist Rulers

by Richard McGregor

Rather than reinforcing Beijing’s writ in the provinces, Hu and Wen discovered that the radical recentralization of tax collection paradoxically only encouraged more economic freelancing outside of the capital. To raise money for the programmes they were still required to deliver, but no longer had the direct taxing power to fund, especially in education and health, localities were propelled into business more than ever. In the words of commentator Liang Jing, the new tax rules ‘forced good girls to become whores’. To make up the budget shortfall, local governments ‘bullied the peasantry, exploited the workers and destroyed the environment, while the central government turned a blind eye, concerned only for GDP and tax revenue, regardless of the process’. Some of the grassroots revenue-raising programmes deployed by local governments desperate for funds are hair-raising. In May 2009, Gongan county in Hubei province ordered state employees collectively to smoke at least 23,000 packs of cigarettes a year, to protect, it said, ‘tax revenues and consumers’ rights’. The more the officials smoked, the plan envisaged, the more money the local authority would collect in taxes. The policy was rescinded after a public outcry.