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Ming Pao: China’s Tax and Spending Dilemma

Hong Kong based Ming Pao reported on June 28 that the latest Chinese statistics showed the government has less income from tax but is spending more. The government’s official response is to reduce spending on car purchases, receptions, officials’ visits (tours) of other countries, and construction of government buildings. However, given the massive corruption in China, it is impossible to control the government’s spending. The other option is to increase taxes, but that also presents big challenges, as the government promised the public that it would reduce the tax burden to stimulate the economy’s growth. Therefore, the government is trapped.

Source: Ming Pao, June 28, 2009