When will land transfer fees no longer remain outside supervision?

The 2014 national land transfer fee revenue and expenditure situation published by the Ministry of Finance on March 24 shows that last year's national land transfer fee revenue was 4.29 trillion yuan, a year-on-year increase of 3.1%; the phenomenon of inadequate collection and management of land transfer revenue still exists, and some places have under-collected, deferred collection, reduced or refunded land transfer revenue. A reporter's investigation found that under-collected, owed or arbitrarily reduced land transfer fees often amount to tens of billions of yuan. In many places, bizarre phenomena have appeared, such as “how much the land transfer fee is reduced and how long it is deferred all depends on one word from a leader” and “the property development is all sold out, yet the land transfer fee is still owed.” (Xinhua Daily Telegraph, March 31)

⟦NL> A review of audit reports on the land sector and national land inspection announcements in recent years shows that the problems of “black holes” and arrears in the collection of land transfer fees have appeared on the list almost every time. Recent corruption cases involving some local officials also mostly involve the seeking of rent through power and the transfer of benefits in land transactions. It can be seen that governing the “leakage” and “black holes” in land transfer fee revenue, as well as problems such as “the buildings are sold out, but the land transfer fee has not been paid,” truly cannot be delayed any longer. Once land transfer fees become some people's “pocket money,” the public interest will be seriously eroded, and the money spent on land expropriation and demolition compensation, social security for farmers whose land is expropriated, rural infrastructure construction and urban low-rent housing construction will be greatly reduced.

To govern the “black holes” and arrears in the collection of land transfer fees, one must first understand the causes of the problem. One important reason is that land transfer fees have always been extrabudgetary revenue for many local governments. Even if land transfer fees in some places account for “half of the country” of local finances, they are still not included in the public fiscal budget. As a result, land transfer fees become “funds outside supervision,” and can easily become local governments' “little treasuries” and “private money.” How it is spent, where it is spent, and whether there is “leakage” are all a muddled account. “How much the land transfer fee is reduced and how long it is deferred all depends on one word from a leader,” and “the property development is all sold out, yet the land transfer fee is still owed” are therefore not hard to understand.

Another important cause is that in the current land expropriation and transfer process, many local leading cadres have too much power and lack checks. In particular, local “top leaders” often intervene in local land transfer matters. After being drawn in by developers' transfer of benefits, they frequently illegally under-collect, defer collection, reduce or refund land transfer fees. How much is reduced and how long it is deferred all depend on one word from them. For example, Qiu He, who was recently brought down, always had a Zhejiang businessman behind his political career, closely following Qiu He's official career to expand his land development territory. Liao Shaohua, former member of the Standing Committee of the Guizhou Provincial Party Committee, publicly tried a few days ago, was also suspected of interfering in the reduction of land transfer fees. When some local leaders and developers share benefits, the regulations on collecting land transfer fees become a mere scrap of paper.

To govern the “black holes” and arrears in land transfer fees, first, land transfer fees must be included in the fiscal budget at the same level, rather than being managed extensively and operated in a closed manner. Land transfer fees have become an important pillar of local fiscal revenue. They are a one-time advance collection of the total land revenue for several future years. If there is “leakage” or serious under-collection, it will bury huge hidden dangers for society. For example, for compensation to those whose land is expropriated, many places generally adopt the lowest line of the statutory standard in actual operation, and some are even lower than the statutory standard. Farmers' rights and interests are therefore seriously violated, and disputes and conflicts occur frequently. The arbitrariness in collecting land transfer fees will also induce local governments' impulse to sell land and erode the red line of cultivated land.

On the other hand, power must be governed according to law to curb rent-seeking through power in land transfer. Land issue expert Huang Xiaohu pointed out that irregularities in the collection of land transfer fees in China occur frequently, yet the division and pursuit of responsibility for violations has long been absent. Even if such problems are discovered, most are only handled through talks and urged rectification, and those dealt with are mostly handled because of corruption such as money-power transactions. With violation costs so low, how could localities not act willfully? Dereliction of duty and misconduct in the revenue and expenditure of land transfer fees should all be held accountable, whether through demotion and salary reduction, or even removal from office and legal liability. Otherwise, the more cultivated land is occupied, the greater the revenue for the locality or department; while the better cultivated land is protected, the more the locality suffers.