Excessive Government Fee Collection in China

There are several thousand administrative and operating fees, compared to 23 taxes in China. Excessive fee collections are largely targeted at business enterprises and farmers. The growth of fee collection resulted from the increase in the gap between government expenditures and revenues, the self-collection and self-utilization policy, and weak law enforcement. Excessive fee collection tends to reduce businesses'investment incentive, aggravate income inequality, breed corruption, and distort the fiscal system. Fee reduction is not possible if the government size and revenue shortage problems of local governments persist. Policy options such as cutting government size are recommended. (JEL "H20", "H87", "P35") Copyright 2005 Western Economic Association International.