From Chinese Press

The sorry state of water pricing

(China Daily)
Updated: 2010-06-07 07:58

By transferring the expenses for maintaining, building and repairing water pipe networks, supposedly to be paid from budgetary funds, and some arbitrary administrative charges to the cost of supplying water, local government agencies are doing what they are not supposed to do and not doing what they are supposed to, says an article in Xinhua Daily Telegraph. Excerpts:

At a symposium on whether the water pricing mechanism should be made public, all the representatives of water companies agreed to do so. But the idea was opposed by most representatives of local price administration authorities.

The symposium, organized by the National Development and Reform Commission, China's top planning body, showed that water companies are not willing to take the blame for rising water prices. They shoulder the responsibility of collecting fees, while most of the charges go to local governments' coffers.

From the dispute over water prices, we can see that some local governments are shirking their responsibility of maintaining, building and repairing water pipelines. And instead, they insist on having a finger in every pie and transfer unreasonable administrative charges to the cost of supplying water.

It is difficult to promote reform for public interests because some public agencies exercise their power only to make money.

How to reduce tax burden

Since the tax burden of ordinary people and enterprises in competitive industries is relatively heavy - second in the world, according to Forbes - tax reform should be aimed at reducing people's burden and channeling some of the profits back to the people, says as article in China Youth Daily. Excerpts:

People are always sensitive to any tax reform because it involves their personal interests. Without doubt, property tax will increase the burden of houseowners and tenants, while resources tax and environment tax will ultimately be transferred to consumers.

Revamping the individual income tax system is the only way people's tax burden can be reduced, because the existing standard deduction is very low and levied on taxable income obtained by individuals rather than their families. What makes things worse is local governments' impulse to increase their revenue. In fact, local governments, taking the property tax in Chongqing and Shanghai as an example, are eager to impose more taxes.

So in order to bring the role of tax in income readjustment into full play, the income distribution pattern between the government and the people should be changed. And the government should implement more tax cut policies and return some of its profits to the people.

(China Daily 06/07/2010 page9)