Tax-Land Coordination Revives Idle Land, People's Daily Reports

    Tax and land authorities pilot information sharing to solve the problem of lack of supervision, recovering 5.6 billion yuan in land use tax

Tax-Land Coordination Forces Out Idle Land

The collection and administration of land use tax has long been one of the difficult problems in China's current taxation field. Because information on land ownership, time, area and other aspects is complex, a small number of enterprises take advantage of information asymmetry to evade their tax obligations, which has also created convenience for some real estate enterprises to hoard land. To this end, the State Administration of Taxation and the Ministry of Land and Resources jointly launched a pilot program of “controlling tax through land, conserving land through tax” to solve the problem of lack of supervision through information sharing. Can this measure fundamentally plug the loopholes in tax collection and administration and promote intensive land use? A reporter recently visited Shandong Province, the first to carry out the pilot, to conduct research.

“Controlling Tax through Land”: Information comparison leaves no place for unregulated land to hide

“This blue area on the map is a potential tax source. The land parcel information declared by the enterprise does not match the actual data, so there may be land that has escaped tax collection and administration.” In the office of the Dongying Municipal Local Taxation Bureau, Wang Qi, head of the First Tax Administration Section, was using tax administration software on his computer to carry out land tax comparison work. With a click of the mouse on each land parcel, information such as the parcel number, use, owner and date of acquisition was clear at a glance, and Wang Qi quickly found the parcels with tax problems.

After confirming that there was a problem of unregulated land, Wang Qi quickly issued a verification notice to the enterprise that owned the land——a petroleum machinery manufacturing company in Dongying. According to the computer comparison results, one parcel of the company's land of more than 14,000 square meters had not been included in tax administration. On-site verification showed that the company had filed a tax declaration for one parcel of land it originally had with the tax authorities, but had not filed a tax declaration for the newly added land resulting from a subsequent land change. The tax authorities immediately handled the tax matter for the company, increasing the annual land use tax by more than 44,000 yuan. Faced with the complete land records provided by the tax personnel, the company's person in charge was fully convinced and paid the back taxes on the spot.

⟦NL> What Wang Qi used was the “Land Tax Source Management System” independently developed by the Dongying local taxation authorities. It collects and transmits land information from the land authorities on a regular basis, and, according to the needs of the tax authorities, compiles and tabulates land tax information with the land parcel as the unit, achieving graphical and information-based management of land parcel tax sources, so that tax personnel can complete the comparison and verification of land tax sources within their jurisdiction without leaving their offices.

“In the past we could not grasp complete land information, and collection and administration mainly relied on taxpayers' declarations. Whatever they declared was often what was recorded. Even if we conducted on-site land inspections, we could not prove that there was a tax problem with the land because we lacked authoritative records.” Yang Yongqing, deputy director of the Dongying Municipal Local Taxation Bureau, explained that long-term taxation practice had led them to believe that for tax authorities to achieve comprehensive and standardized management of tax sources, they must have information from authoritative departments as support, and the land authorities hold detailed information on the location, area, boundaries and rights holders of each parcel of land, which made cooperation between the two departments inevitable. “After sharing information with the land authorities, we cracked the previous problem of asymmetric collection and administration information and achieved ‘controlling tax through land.’ Through dynamic monitoring and real-time analysis of each parcel of land, we effectively closed the loopholes in tax collection and administration.” said Wang Zhibo, director of the Land and Real Estate Tax Division of the Shandong Provincial Local Taxation Bureau.

According to statistics, since 2013, local taxation authorities at all levels in Shandong have cumulatively exchanged 873,000 items of land parcel information with land authorities, verified more than 34,000 parcels of land that had escaped tax collection and administration, increased taxable land area by 157 million square meters, and cumulatively recovered 918 million yuan in land use tax.

“Conserving Land through Tax”: The cost of idle land rises sharply

Bai Jingming, deputy director of the Research Institute for Fiscal Science of the Ministry of Finance, explained that urban land use tax is an important property tax and plays an important role in regulating land use. Because land use tax is levied annually according to land area, it means that whoever occupies land for a longer time and with a larger area must pay more tax. At a time when urban construction land is generally in short supply, timely collection and administration of land tax greatly raises the cost for enterprises of leaving land idle or hoarding land, and can optimize the allocation of land resources.

During a land information comparison, the Gaoqing Local Taxation Bureau of Zibo City found that a textile company within its jurisdiction had never paid land use tax on one of its land parcels. On-site verification found that after acquiring the land, the person in charge of the enterprise obtained a loan from a bank and then absconded, leaving the land idle for a long time. The local taxation authorities promptly fed this information back to the land and other departments, and the land authorities took the lead in auctioning and disposing of the parcel in accordance with the law. The more than 5 million yuan in land use tax owed by the enterprise was also recovered and turned over to the treasury from the auction proceeds. Zhao Desen, deputy director of the Zibo Municipal Local Taxation Bureau, explained that after applying the Land Tax Source Management System, Zibo City used a reverse-marking method to mark on the map the information on enterprise land occupation that the tax authorities had but the land authorities did not, so that the land authorities could promptly grasp information on illegal land use such as occupation without approval and unauthorized change of use, providing a data analysis basis for comprehensive land use.

“In the past, after acquiring land, because there was little cost pressure from taxation, we felt the land could be developed slowly. Now the slower the development, the higher the tax cost, so we will think of every possible way to develop the land as quickly as possible.” Li Huiliang, finance manager of Shandong Guangyu Real Estate Co., Ltd., told the reporter that timely collection and administration of land use tax has increased the enthusiasm of real estate enterprises to develop land.

Tax-Land Coordination Needs to Be Further Strengthened

The reporter learned from the State Administration of Taxation that starting in the second half of 2013, the State Administration of Taxation and the Ministry of Land and Resources jointly carried out a pilot program of “controlling tax through land, conserving land through tax” in 17 regions across the country, uncovering more than 140,000 parcels of taxable land with inaccurate areas or undeclared status, increasing taxable land area by 600 million square meters, and recovering 5.6 billion yuan in tax. The urban land use tax recovered in the 17 pilot regions exceeded 10% of the previous year's revenue from that tax, among which Jinhua in Zhejiang, Xining in Qinghai and Ankang in Shaanxi accounted for 44%, 42% and 34% respectively of their regions' previous year's revenue from that tax.

It is understood that all 17 cities in Shandong Province have now applied the “Land Tax Source Management System.” However, to further achieve win-win tax-land management and comprehensive and effective control of land tax, multiple difficulties still need to be solved in a coordinated manner.

“At present, apart from Qingdao, 8 municipal-level local taxation bureaus in Shandong have obtained electronic maps from the land authorities, with relatively good results, while the other 8 municipal-level local taxation bureaus have obtained non-graphical electronic data or paper archives. Such data is incomplete and non-standard, making it difficult to achieve full coverage and seamless management of land parcels.” Wang Zhibo explained that because the land authorities' parcel information has not yet been centralized at the provincial level, most land management information is distributed among county-level administrative regions, resulting in different information collection methods, channels and data formats at local taxation departments at all levels, which has affected the effectiveness of “controlling tax through land.”

In its work, Zibo City found that it is very common for the name of the land rights holder in the land authorities' information to be inconsistent with the name of the taxpayer in the land tax source information. The success rate of matching the two was no more than 30%, requiring manual establishment of linkages, while grassroots work involves a great many tasks and it is difficult for manpower and material resources to keep up in a timely manner.