Heavy taxation has become a major factor that hampers private
enterprises' expansion, according to a survey by the China National
Democratic Construction Association (CNDCA).
A report based on the results of the survey was released at the
ongoing CNDCA 9th national congress, which opened in Beijing on
Sunday.
According to the survey, 12.5 percent of private enterprises in
China found the tax burden "too heavy, almost unbearable", reported
the Beijing News on Monday.
One-fourth of the enterprises agreed that "the administrative
and law enforcement departments relevant to the private sector"
have no concept of providing good service to business -- and
sometimes even use their power to take advantage of private
enterprise, the newspaper said.
The survey found that value-added tax revenues came mainly from
the manufacturing, wholesale and retail industries, while most
sales tax was generated from the construction and real estate
industries. There were almost no tax revenues from private-sector
financial firms or other state-dominated industries, which shows
that private enterprises could only develop in parts of the
economy.
Although new laws that take effect on Jan. 1 will eventually
equalize the tax rates for foreign and domestic companies, foreign
enterprises will enjoy some residual tax advantages as higher rates
for them are phased in, according to the newspaper.
CNDCA suggested that new regulations to implement the enterprise
tax law should define small private enterprises as those with
annual profits of less than 50,000 yuan (about 6,700 U.S. dollars)
and should also encourage small enterprises to expand.
It also suggested that private companies should be allowed to
enter all sectors, including those that are open to foreign
enterprises and some of those that are yet to open.
As of the end of 2006, there were 34 million private enterprises
in China, which generated tax revenue of 350.5 billion yuan or 9.5
percent of total tax revenues. That was a rise of about 6
percentage points from the share of tax revenues in 2000, when
private firms only generated 3.3 percent of the nation's tax
revenues.
CNDCA, one of the country's eight non-communist parties, was
founded by industrialists and intellectuals in Chongqing on Dec.
16, 1945. The CNDCA has more than 108,000 members nationwide,
mainly business people.
(Xinhua News Agency December 18, 2007)
