China’s Hunan puts non-tax revenue in crosshairs, cracking down on sketchy fines
Provincial move comes as Beijing steps up efforts to revive market sentiment, and changes could affect fiscal revenue in debt-ridden regions
Hunan has become the latest Chinese province to tighten controls on non-tax revenue growth through a revision of local regulation, as Beijing intensifies efforts to revive market sentiment and private investor confidence.
The regulation changes, set to take effect on November 1, explicitly mandate that local-level governments fully remit proceeds from the disposal of confiscated goods – along with any interest they generate – to the state treasury, in a sign of how such non-tax revenue is now under stricter oversight by the central government.
Additionally, the controls forbid local officials from using fines as a tool to increase revenue, while also prohibiting the linking of law enforcement performance assessments to the amount of fines collected.
Non-tax revenue – including administrative fees, government fines and other sources – often reflects the financial burden on private firms, many of which have struggled amid a post-pandemic slowdown, cutthroat domestic competition and external trade tensions.
And its share in fiscal revenue has been growing as authorities in debt-ridden regions seek alternative income sources amid dwindling land sales.