The hard work that went into authoring The Administrative Foundations of the Chinese Fiscal State is palpable from the first page. Cui seeks to achieve two aims: (1) to tease out aspects of Chinese taxation of general interest to policy makers and social scientists in other countries (P. 3) and (2) to offer a new framework for understanding the policies and politics of taxation in China (P. 4). Both aims are accomplished handily.
Particularly fun for those of us who like tax administration, Cui claims that ground-level tax administration is essential to understanding the Chinese tax system. Focusing on tax administration, tax collection and revenue mobilization, allows Cui to show us something new about our own tax systems. He offers us the opportunity to see more clearly our own paradigmatic orientation: one that centres the importance of rule of law.
Instead of accepting standard stories – that third-party reporting will reduce evasion, that offering incentives to tax administrators will facilitate greater collection of tax revenues, and that boosting taxpayer morale and enhancing audit capacity will result in greater revenue collection – Cui explores how the Chinese tax administration has managed to enhance its gross tax ratio without relying on the standard advice.
Perhaps most fascinating for those of us used to the dominance of “rule of law” as a necessary feature of a functioning social order, Cui’s work demonstrates that “a state that is organized, peaceful, and in many ways compatible with modern market economies may nevertheless largely dispense with legal norms” (P. 18). Cui’s bold claim that “law may be an inessential instrument for governance” (P. 18) is likely to make some of us squeamish. Such a fundamental challenge to our narratives about the importance of law in tax (or any other subject) is absolutely worth reading.
If the broad claim (about the relative unimportance of law) gives us pause, it’s possible that Cui’s exploration of the practices of tax administration in China might be recast in ways that nevertheless affirm our sense of the importance of “law”. Cui’s book offers a deep dive into the practices of tax administrators. For those of us inclined to legal pluralism as a paradigm, tax administration practices are law – just not formal law “on the books”. Put another way, in the space left by formal legal rules, Cui finds hundreds of thousands of non-specialized revenue managers in tax administration.
I admit to having carried Cui’s book with me on many flights intending to read it and yet feeling daunted, but once I got started I could not put the monograph down. It is filled with fascinating insights: from an exploration of how China’s revenue management system persisted through the importation of substantial legal reforms in the mid-1990s to an examination of how “audit” is a misnomer for the kinds of activities undertaken by tax administration personnel (which is more like a “self-inspection” or tax amnesty process). Cui develops a concept of “atomistic coercion” (a kind of non-rule-based tax collection practice exercised by individual tax administration personnel). He dives into what he calls the “paradox of taxpayer information”: that if you need good quality information to secure compliance it is likely unavailable and when that high-quality information is available you likely don’t need it. And his expertise on value added taxes, in particular, shines through (I suspect inadvertently, since the particularities of the formal tax system is not the direct focus of Cui’s work in this monograph).
In addition to Cui’s detailed and thoughtful analysis, another feature of the work that makes it a must read bears mention. Occasionally you get glimpses of Cui himself – for example, where he recounts stories of his own experiences teaching in China, meeting with tax administration personnel, or getting a foot massage. These stories gave me a much richer sense of how Cui came to build his theory of tax administration, policy making and politics. And his observations from his experiences enabled me to better see the thoughtfulness behind his questions and his approach to making sense of the Chinese tax system.
