Metodologías

The last two chapters gave a detailed explanation of bureaucratic expansion and the fiscal crisis of counties and townships in Hunan since the early 1990s. This chapter and the next one will analyze the emergence of the local predatory state in Hunan that resulted from the crisis and expansion. This chapter will analyze township and village public finance and the bewildering array of taxes and fees that townships and villages extracted from peasants since the early 1990s. It will also explain

variations of the amount and types of taxes and fees across different topographies and time periods in Hunan. The next chapter will analyze the grain collection process.

Overall, the two chapters argue that local governments and peasants in Hunan had become enemies since the early 1990s. A profound crisis was looming in rural China.

The Emergence of the Local Predatory State

As explained in chapter 2, in the 1990s and beyond, taxes and fees collected from peasants became the single most important source of income for townships.

Peasants financed a township‘s every need, ranging from paying salaries to its cadres to providing public goods mandated by the central government, such as rural basic education. Local governments made unlimited fiscal demands on peasants. In the words of a local cadre, ―The central government ensures its own fiscal capacity, whereas peasants underwrite local governments. Peasants take money out of their own pockets to ensure the functioning of local governments.‖¹ Thus emerged the issue of

1 Interviews with cadres in the Bureau of Economic Management in Sishui, Jan. 2002. In the cadre‘s words, ―zhongyang bao zhongyang caizheng, nongmin bao jiceng zhengquan. Nongmin na qian bao jiceng zhengquan.”

161

―peasant burdens,‖ which plagued vast areas of rural China from the early 1990s through 2004, the year when peasant burdens were lowered for the first time in more than a decade as a result of the rural tax-for-fee reform (2002-2006).²

Types of Taxes and Fees State and County Taxes

Townships and villages in Hunan collected close to twenty types of taxes, fees, fines, and funds (ji zi) from peasants in the mid-1990s and beyond.³ In lake areas, local governments sometimes charged more than 30 categories of taxes and fees from peasants.⁴ These taxes, fees, and fines could be separated into two large categories:

those levied by the state (guo jia) and those charged by the local government,

including village fees. Although the tax charged by the state was light, taxes, fees, and fines charged by the local government were onerous. In the words of peasants, ―The first tax is light. The second tax is heavy and the third and forth taxes are bottomless.‖⁵ The first tax was the agricultural tax. The second tax referred to standard taxes and fees charged by townships and villages, commonly called ―three fees and five unifieds‖ (santi wutong). The third and forth taxes were random, lawless, and

exorbitant fees, funds, and fines that townships and villages collected from peasants.

2 See chapter 7 for details on the rural tax-for-fee reform.

3 Interviews with peasants in northern and central Hunan, 2001-2003.

4 Interviews with peasants in Sishui City, a lake county in northern Hunan, Dec. 2001-Jan. 2002.

5 Interview with a researcher in the Policy Research Office of the Provincial Party Committee of Hunan, Changsha, March 2002. In Mandarin the expression is ―doushui qing, ershui zhong, sanshui sishui wuditong.‖ See also Bernstein and Lu, Taxation without Representation, 59.

162 The Agricultural Tax (nongye shui)

The agricultural tax was the tax that peasants turned in to the state for each mu of land that they tilled. This tax was measured in grain (zheng shi) or in kind, rather than in cash (zheng dai jin). It was usually paid in kind. Since 1985, however, the agricultural tax was denoted in grain but paid in cash.⁶ This was an ancient tax, known among peasants and local cadres alike as the ―imperial grain and state tax‖

(huangliang guoshui). When the agricultural tax was finally abolished nationwide in 2006, it was said that this act terminated a tax that lasted 2600 years. As revealed by the phrase ―imperial grain,‖ peasants understood the agricultural tax to be their fiscal obligation toward the state or the central government for tilling the land. In reality, based on the fieldwork, it was the county, rather than the central government that collected and used the agricultural tax. As mentioned in chapter 2, townships could not share the agricultural tax with counties. It was a task that they had to fulfill.

Townships, however, could keep 5% of the agricultural tax surcharge, which was levied at 14% of the agricultural tax.⁷

Townships, after receiving the agricultural tax quota from counties, distributed it among villages, based on the amount of land each village had. Village cadres then further divided the agricultural tax among individual peasant families. The amount was written on peasant burden cards, which were issued to each peasant family in the mid 1990s.⁸ The last step of this tax assigning process where the agricultural tax was recorded on individual peasant families‘ burden cards differed from the practice during the era of the People‘s Communes (1960s through early 1980s), when taxes

6 Nongcun shuifei gaige zhishi wenda [Questions and answers about the rural tax-for-fee reform]

(Beijing: Dangjian duwu chubanshe, 2002), 36.

7 Interviews in Huaizhou, Zizhou, Sishui, and Yuanxiang, 2001-2003.

8 See the section entitled ―Step One: Assinging Taxes and Fees‖ in chapter 4 for an explanation of peasants‘ burden cards.

163

were assigned to each production team (shengchan dui), rather than to individual peasant families. Ever since the family responsibility system went into effect in rural China in the early 1980s, individual peasant families, rather than production teams, became the accounting unit for tax purposes.⁹

In oral communications with peasants and cadres and on various records of peasants burdens, such as peasant burden cards and village and townships grain and money collection tables, the agricultural tax was alternatively called the agricultural tax (nong ye shui), taxed grain (zheng liang), public grain (gong liang), or simply grain (yuan liang). The agricultural tax was called different kinds of grain simply because it was taxed in kind, rather than in cash most of the time. Because it was a tax, peasants were not paid money when they turned in their grain.

The agricultural tax was quite light. The amount was fixed in 1958 and had remained constant until the rural tax-for-fee reform in 2002, which raised the rate to 7%. Because the amount of the agricultural tax remained the same when grain output per mu had improved significantly since 1958, the agricultural tax rate was as low as around 3% in the 1990s.¹⁰ This tax ranged from 15 kg to 35 kg per mu, depending on the quality of land, which was categorized into three kinds, including the first rate (shang deng), the second rate (zhong deng), and the third rate (xia deng). The first rate (shang deng tian) was only taxed at around 30 to 35 kg of grain per mu. The third rate

9 The three-tiered system of the rural collectives consisted of a production team (shengchan dui), a brigade (dadui), and a people‘s commune (renmin gongshe). A production team was the basic

accounting unit. When the family responsibility system went into effect in the early 1980s, a production team became a team (zu), a brigade became a village (cun), and a people‘s commune became a

township (xiang).

10 Various interviews with cadres in the Finance Bureaus of Sishui City, Huaiyang District, Huaizhou City, and Fenglin District, Huaizhou City (2001-2003). Interviews with cadres in the Rural Tax-for-Fee Reform Office in the Department of Finance of Hunan province (March 2002). Interviews with cadres in the Rural Tax-for-Fee Reform Office in the Finance Bureau of Huaizhou (Oct. 2002 and June 2003) and with the Rural Tax-for-Fee Reform Office of the Finance Bureau of Zizhou City (June 2002). See also Nongcun shuifei gaige zhishi wenda [Questions and answers about the rural tax-for-fee reform]

(Beijing: Dangjian duwu chubanshe, 2002), 35. The number provided in this book is 2.5%.

164

(xia deng tian) was taxed with 15 to 20 kg of grain per mu.¹¹ For example, the

agricultural tax for Liugongwan township in Huaiyang District was 674,495 kg total or 26.7 or 26.8 kg per mu on average (tables A.6-7). It was 29.7 kg per mu for Qingpu Town, Zizhou County (table A.22) and 36.7 kg per mu for Dongxingyuan Town, Yuanxiang County (table A.24).

Procurement Grain

The state also purchased grain from peasants. In addition to the agricultural tax on grain, each year every peasant family was also assigned a procurement grain quota (gou liang). Unlike the agricultural tax, peasants were paid money when they turned in the procurement grain. The price, called procurement price (gouliangjia), plate price (paijia), or adjusted price (ping jia), however, was usually lower than the market price.¹² Every year after they harvested grain in the fall, individual peasant families would bring grain to the grain station (liang zhan) in a township. This was called

―turning in grain to (the state).‖ Grain stations paid peasants not with cash, but with a receipt describing the grade and the amount of grain that peasants sold, which peasants used to clear their accounts (jie zhang) with their village accountants.¹³

In the 1980s when peasant burdens were light, the procurement grain that peasants sold to the state was more than enough to pay their taxes and fees and they got paid from their village accountants when the peasants cleared their accounts. The

11 Interview with a retired village accountant in Lijiamiao Village, Liugongwan Township, Huaiyang District, Huaizhou City, Nov. 2001.

12 Interviews with both the retired and the current village accountant in Village Lijiamiao, Liugongwan Township, Huaiyang District, Nov. 2001. Interview with a village accountant in Zhutian Village, Dongxingyuan Town, Yuanxiang County, Oct. 2002. Interview with a retired director of the Fiscal Office of Dongxingyuan Town, Yuanxiang County, Oct. 2002.

13 See the section entitled ―Step Two: Collecting Grain Before 1998‖ in chapter 4 on how peasants cleared their accounts with their villages.

165

money enabled peasant families to pay for their children‘s tuition to attend schools, which started on September 1 in the fall, right after the harvest. Thus, peasants were very enthusiastic about selling grain to grain stations in the 1980s. In the 1990s, however, as peasant burdens became heavier and heavier, after turning in grain to a grain station, peasants still owed townships and villages many taxes and fees. Instead of getting paid by their village accountants, they actually had to bring money with them to clear their accounts.

When peasants complained about heavy burdens in the 1990s and contrasted them to the light burdens in the 1980s, they always used as an indicator whether they got paid or not after turning in grain to the state, as can be seen from the following comments:

Case one: A peasant in a lakeside village in Huaiyang District, Huaizhou City complained that the burden level in 2000 was significantly heavier than that in 1981. His family cultivated 6.8 mu of land in 1981. They turned in 557 kg of grain to the state and received 100 yuan from the village. In 2000, the family cultivated 8 mu of land and had to turn in 1,200 kg of grain to the state.

However, the family was not paid any money at all for all of this grain.

Instead, they had to bring more than 100 yuan to the village to clear their accounts.¹⁴

Case two: In my village, land was distributed to individual peasant households in 1980. As a result, peasant enthusiasm for cultivating the land increased rapidly. Until 1994, peasants were still enthusiastic about tilling the land, because after turning in the taxed grain (zheng liang) and the procurement grain (gou liang) to the state, peasants not only could pay for all taxes and fees, but they also received money, which was enough to pay for their children‘s tuition that was due on September 1. Nowadays, even though peasants no longer have to turn in the procurement grain, the amount of grain that they have to turn in to the local government is similar to before.¹⁵ In addition, they

14 Information collected by a vice director of the Bureau of Audit (shenji ju) in Huaiyang District, Huaizhou City who was stationed in Yongbozhou Village, Qianjiaping Township as a member of the rural tax-for-fee reform work team organized by the district, March 2001.

15 The grain reform in 1998 abolished the procurement grain. See the section entitled ―1998 Policies and Their Impact‖ in chapter 4 for more details.

166

still have to pay money to the local government to clear their accounts. As a result, peasants no longer want to till land and many have abandoned it. Every team in this village has land that is abandoned. There are nine people in my family and we have more than seven mu of land. However, we are only tilling a little more than 1 mu. The rest lies fallow. My two sons are both doing small businesses. One is selling marinated meat and the other is doing some

wholesale business.¹⁶

Case three: In my brigade (da dui),¹⁷ there is not a single year [in the 1990s]

when we received money after turning in grain to the state. Every year we had to bring some money with us to clear our accounts.¹⁸

Case four: I remember that in 1997 my village altogether turned in more than 80,000 kilos of grain to the grain station. We only got 0.21 yuan back.¹⁹

The Pig Slaughtering Tax and the Special Agricultural Product Tax

Townships also collected the pig slaughtering tax and the special agricultural product tax from peasants on behalf of counties. Unlike the agricultural tax, these two taxes were incomes that a township could share with a county. The special agricultural product tax was a type of fiscal tax (cai zheng shui) collected by a township‘s fiscal office. The pig slaughtering tax was a type of local tax (di shui) collected by local tax officers. As explained in chapter 2, each township was assigned a basic figure (ji shu) of fiscal taxes, local taxes, and state taxes that it had to turn over to a county.²⁰ Once it

16 Interview with a retired village accountant in Lijiamiao of Liugongwan Township, Huaiyang District, Nov. 2001.

17 Though rural collectives were abolished in the early 1980s, their linguistic influence lingers on. Many peasants still refer to their villages as brigades and their teams as production teams. It is interesting that though many peasants continue to use the terms ―brigades‖ and ―production teams,‖ only the very old still refer to townships as the People‘s Communes. Further, village cadres are more likely to use the new terminology than ordinary peasants. Interviews in Huaizhou, Zizhou, Yuanxiang, Sishui, and Jianglu, 2001-2003.

18 Interviews with peasants in Zhutian Village, Dongxingyuan Town,Yuanxiang County, Oct. 2002.

19 Interview with the village accountant in Lijiamiao Village, Liugongwan Township, Huaiyang District, Nov. 2001.

20 See the section entitled ―Fiscal System at the Township Level‖ in chapter 2 for details.

167

fulfilled the basic tax-sharing figure, a township would get a share of the taxes through budget appropriation.

Because the economy of townships in Hunan stagnated in the 1990s, the pig slaughtering tax became an important source of income for a township. For example, in Liugongwan Township, Huaiyang District, the pig slaughtering tax amounted to 53% of all local taxes in 2000 (table 2.2 ). To make sure that they could fulfill the basic local-tax figure, townships distributed the pig slaughtering tax quota among villages, no matter if peasants slaughtered pigs or not. Each village was assigned a certain number of pigs slaughtered, which was then converted to several thousand yuan of the pig slaughtering tax (table 3.1). A village then divided the quota either among households or individual peasants. For example, Zhutian Village,

Dongxingyuan Town, Yuanxiang County was assigned 157 pigs slaughtered in 2002 and each slaughtered pig was taxed at 12 yuan. The total pig slaughtering tax that the village needed to pay was 1,884 yuan. On average, each of the 400 households in the village needed to pay 4.71 yuan of the pig slaughtering tax.²¹ In Lijiamiao Village, Liugongwan Township, Huaiyang District, every four peasants had to share the tax of one slaughtered pig before 2002.²² Before the pig slaughtering tax was abolished in 2002 during the rural tax-for-fee reform, a county could usually collect several million yuan of the tax. For example, Huaiyang District, a small county with 300,000 peasants and 10 townships collected 1.02 million yuan of the pig slaughtering tax in 2001.²³

21 Interview with the accountant in Village Zhutian, Dongxingyuan Town, Yuanxiang County, Oct.

2002. This village has 400 households.

22 Interview with a retired village accountant in Lijiamiao Village, Liugongwan Township, Huaiyang District, Nov. 2001.

23 Number taken from Huaiyang qu 2002 niandu nongcun shuifei gaige shangji zhuanyi zhifu fenpei biao [Table on the distribution of the rural tax-for-fee reform transfers in Huaiyang District in 2002]

made by the Rural Tax-for-Fee Reform Leading Group of the Finance Bureau of Huaiyang District.

168

The special agricultural product tax is levied on ―cash crops,‖ such as fish, fruits, bamboo, and oil seeds. Because the farmland occupation tax and the deed tax in Hunan were almost nil (table 2.2), the special agricultural product tax became the only tax that townships in Hunan could collect to fulfill the fiscal-tax quota. In order to do so, townships collected this tax even when peasants did not grow any cash crops. For example, in order to fulfill its fiscal tax quota of 165,000 yuan (table 2.1),

Liugongwan Township assigned each village a few thousand yuan of the special agricultural product tax (table 3.1).

Furthermore, townships made peasants pay for both the agricultural tax and the special agricultural product tax for the same crop. For example, in Qizong Township in Qinggang, a county-level city in central Hunan, the township charged both the special agricultural product tax and the agricultural tax for the cotton that peasants planted.²⁴ Townships distributed the special agricultural product tax quota on land, rather than on households, as was the case with the pig slaughtering tax. For example, in Qingpu Town, Zizhou County, every mu of fish pond was charged 20 yuan of the special agricultural product tax, even when fish ponds dried up or when the peasants‘

fish were poisoned by pesticides and peasants generated no income from farming fish.

24 Interviews with peasants and peasant protest leaders in Baishiqiao Village, Qizong Township, Qinggang City, summer 2004.

169

Table 3.1: Quotas of the Pig Slaughtering Tax and the Special Agricultural Product Tax in Villages of Liugongwan Township (unit: yuan)

Village Name 1999 Special Agricultural

Sources: Guanyu xiada 1999 niandu nongye techanshui renwu de tongzhi [Circular regarding the special agricultural product tax quota for 1999] issued by the Liugongwan Township on July 5, 1999.

Liugongwan xiang gecun (chang) nongye techanshui ji nongye techanshui fujia renwu [Quotas of the special agricultural product tax and its surcharge for all villages (farms) in Liugongwan Township]

made by the township government in April 2001; Liugongwan xiang 2001 nian tuzaishui nongye techanshui renwu fenpei biao [Table on the distribution of the quotas for the pig slaughtering tax and the special agricultural product tax of Liuongwang Township in 2001].

In the same town, every mu of hilly land that planted the oil seeds tree was charged 5 yuan, even when peasants did not harvest much of an oil seed crop.²⁵ All other cash crops were charged one yuan per mu. Some villages, such as Zhutian of

25 Because peasants no longer collected firewood from forests after they switched to coal, they stopped taking care of their forests. As a result, grass grew wildly and the yield of oil seed trees was very low.

Interviews in villages in Zizhou County, 2001 and 2002.

170

Dongxingyuan Town, Yuanxiang County, merged the special agricultural product tax with the agricultural tax so that peasants would turn in both taxes when they paid their agricultural tax. Peasants resented the fact that they had to pay taxes for things that they did not grow or raise. ―What the hell! Do we grow any kind of special products at

Dongxingyuan Town, Yuanxiang County, merged the special agricultural product tax with the agricultural tax so that peasants would turn in both taxes when they paid their agricultural tax. Peasants resented the fact that they had to pay taxes for things that they did not grow or raise. ―What the hell! Do we grow any kind of special products at