Hidden Taxes

Many Chinese Are Surprised To Find How Much They Pay

It is tax day in the United States, when many citizens groan and grumble at the size of their refund (what refund?) or scratch their heads as they try to maximize deductions. Our partners at Sohu recently published an infographic, which we have translated and adapted below, that reveals some of the hidden taxes that Chinese pay. The original graphic was removed from the website after netizens began commenting on its revelations.

National tax revenue as a proportion of GDP

China ranked #2 in Forbes magazine’s 2009 Tax Misery and Reform Index—in other words, Chinese taxpayers have the second-highest tax burden in the world. But according to survey results, 90% of Chinese don’t understand what taxes they are paying.

In 1763, the British colonies began fighting against the rule of Parliament, asserting their rights with the slogan “no taxation without representation.”

In China, it’s a widely-held belief that if you make less than ¥3,500 a month you don’t pay taxes. But that’s wrong. China is full of hidden taxes—whether you’re buying clothing, buying a home, paying rent, or purchasing groceries, you’re always paying taxes, though you might not know it. In other words...

As long as we’re alive, we’re always paying taxes!

As long we’re consuming goods, we’re always paying taxes!

So how much are we paying in taxes?

Lan and her husband are a middle-class couple living in Beijing. Let’s take a look and see how much money they pay in taxes every year.

Total cost of meals that goes toward taxes every year: ¥1,887

Note: For the purpose of these calculations we use 17% for value-added tax (VAT), 5% for consumption tax, and 5% for business tax; actual percentages vary depending on place and circumstance. On top of each of these taxes, the consumer pays a city construction tax and an education surtax equal to 7% and 3% of the tax, respectively.

Lan: ¥3,400; Lan’s husband: ¥1,200

Makeup: ¥5,000; Hair styling: ¥1,000; Miscellaneous household goods: ¥1,000

Note: Value-added tax on electricity is 17%, and on water and gas is 13%; business tax on telecommunications is 3%.

In big cities, land transaction fees make up 40% of the cost of a home. Taxes account for 15% of these fees.

Translated by Austin Woerner.

Economy, Society
Taxes, Quality of Life, Economy