What Can One Learn from Chinese Tax Administration? A Precis of The Administrative Foundations of the Chinese Fiscal State

State capacity in taxation is a major determinant of which countries become prosperous. The Administrative Foundations of the Chinese Fiscal State explores how China developed a tax system to support its economic transformation, and the general lessons this holds for developing countries. Rather uniquely, China first embraced, and then abandoned, the paradigm of self-assessment. Minimizing reliance on self-assessment became the fundamental distinguishing feature of Chinese tax administration. While China’s emphasis on extensive monitoring of taxpayers and frequent government interventions, along with a de-emphasis on audits and deterrence, is consistent with recent empirical findings on the effectiveness of different enforcement tools, it challenges conventional wisdom about tax administration. The book ultimately argues that there are fundamentally different forms of state capacity: although commentators on tax and development often equivocates on the meaning of state capacity, choosing between irreconcilably different forms of state capacity may be unavoidable.