Finance and Taxation Bureaus

These are the two "comprehensive bureaus" (zonghe ju ), responsible for coordinating the financial activities of industrial bureaus and enterprises.^[17] Although their relations are not always harmonious, municipal bureaus of taxation and finance perform closely related functions and indeed have been separated organizationally only in recent years. The scope of responsibility, and power, of the finance bureau is greater than that of the taxation bureau. The finance bureau is responsible for managing both revenues and expenditures for the city. It budgets industrial investments from city revenues to bureaus and enterprises, and it sets tax quotas for collection in the city as a whole and divides them among industrial bureaus, which in turn divide them

among their enterprises. While it is under the nominal leadership of the Ministry of Finance and must conduct its business in accord with that ministry's regulations and documents, the bureau is in fact an organ of the city government that is directly under the city's planning and economic commissions and ultimately responsible to the mayor's office.^[18] The finance bureau must agree to all investment expenditures by enterprises, whether they are made out of city funds, loans from bank deposits, or their own funds. Public finance funds to be loaned to enterprises must be placed in the city budget. The bureau must also approve any tax breaks that are included in financing packages given to enterprises, or any tax bailouts or subsidies of firms in financial trouble.

The taxation bureau was a department within the finance bureau before the tax reforms of the early 1980s. Now it is a separate organ responsible for fulfilling tax quotas set by the finance bureau. Although it conducts its work according to guidelines and regulations sent down from the General Bureau for Taxation in Beijing, the taxation bureau operates under the guidance of local authorities: the finance bureau, which sends down annual tax quotas that serve as targets both for enterprises and for tax collectors; the planning and economic commissions; and ultimately the mayor's office. Its relationship with the finance bureau is an ambiguous one: in many cities, the rank of the bureaus is the same, and their responsibilities overlap, whereas the scope of the finance bureau's responsibility and power are broader. The two organizations must agree to all tax breaks, but the responsibility is often blurred because of an overlap in functions. Many local tax bureaus have tried to assert their independence in recent years and have precipitated discord with finance departments over their mutual powers and responsibilities. These disputes must be ironed out by planning and economic commissions, or by the mayor's office.