Chinese tax collectors descend on companies as budget crunches loom

Chinese authorities are chasing unpaid taxes from companies and individuals dating back decades, as the government moves to plug massive budget shortfalls and address a mounting debt crisis. Local governments have long been squeezed for cash since the central government controls most tax revenue, allotting a limited amount to local governments that pay about 80% of expenditures such as salaries, social services and investments in infrastructure like roads and schools. Under leader Xi Jinping, the government has cut personal income, corporate income, and value-added taxes to curry support, boost economic growth and encourage investment - often in ways that favored the rich, tax scholars say. Government statistics show it accounts for just under 9% of total tax revenues, and China has no comprehensive nationwide property tax. Finance Minister Li Fo'an told the official Xinhua News Agency that the latest reforms will give local governments more resources and more power over tax collection, adjusting the share of taxes they keep. "The central government doesn't have a lot of responsibility for spending, so it doesn't feel the pain of cutting taxes," said Cui Wei, a professor of Chinese and international tax policy at the University of British Columbia. As local governments struggle to make ends meet, some are setting up joint operation centers run by local tax offices and police to chase back taxes.