The strict measures of “zero-COVID” have seriously affected the Chinese economy, so much so that the country’s wealthiest are considering fleeing (some already have) from the Asian giant. Their decision has been hastened following the measure that the CCP will impose at the end of the year: the strictest tax in the world.
The new tax, which was agreed upon at the last 20th CCP National Congress, aims to “regulate the accumulation of wealth” under the strategy of common prosperity, an idea that came from former CCP leader Deng Xiaoping.
To prevent this “flight” of millionaires, the Chinese Communist Party (CCP) set up several customs checkpoints to force citizens to contribute significantly to the CCP. Some might say it’s “Your money or your Life.”
Several netizens commented that the Chinese immigration company’s WeChat accounts disappeared as well as the groups.
The owner of a prominent immigration company with the social media account @Sunny Visa posted that it received an order from WeChat to remove all immigration-related content. It must also drop all immigration groups. The account noted that the immigration industry might face changes, and there may not be any immigration assistance available to assist people fleeing China.
Meanwhile, after learning of the high tax called “the golden tax phase IV,” celebrities and higher-income citizens began to migrate one after another.
Some advanced their plans to leave China to settle abroad, but according to testimonies, they were repeatedly harassed by Customs Department officials.
A person in charge of a Chinese foreign trade company, who gave the name Dai for security reasons, revealed that several immigration postings were circulated on Weibo on November 10, but all “disappeared” on November 11. He also commented that the passport of a friend who works for the Shanghai Foreign Service Company was revoked on November 11.
Lu Ping, a Chinese tourist who has just arrived in Japan, commented that before leaving the country, he was taken to a small office for a thorough interview where officials asked him several questions: “Why are you leaving, where to, what will you do outside the country, are you leaving for good, who do you work for, and others.
Although it is known that several celebrities and businessmen started to leave the Asian country when the “zero-COVID” policy closures intensified, this time, it seems that celebrities decided to settle abroad for good.
Last August, Yao Ming, president of the Chinese Basketball Association, sold his assets and settled in Houston, U.S., with his family. In his early years as a basketball player, Yao Ming became well-known in the United States. He has acquired U.S. citizenship, and his daughter was also born there. He will not return to China.
Recently, LeJia, a famous TV panelist, posted photos of her life in the United States. However, the IP address of her social network post shows that she no longer lives in China.
However, the CCP is currently searching for the whereabouts of each citizen and then forcing them to return and pay the new tribute.
The golden tax phase IV
The new tax, called the golden tax phase IV, is a high tax that will be imposed on high-income and high-net-worth individuals through a novel, innovative tax system.
On October 9, the Hainan Provincial Tax Bureau and the Market Supervision Administration announced that they would conduct random audit checks on the high-income population.
On November 7, the CCP moved forward with the new taxation system. The Shenzhen Municipal Tax Bureau announced that a $280 million (2 billion yuan) tender was open to create the new tax platform.
The authorities also explained that the tax management system would be technically improved and use new generation information technologies, such as big data and artificial intelligence.
The new application for tax control will focus on a strict follow-up of taxpayers’ capital transfers, investments in non-monetary and monetary assets, payment of taxes in installments, and transfer of capital stock and reserves, among others.
The authorities also informed that the golden tax includes clauses for tax evasion, thorough credit investigation of each taxpayer, their income and expenses, and information on their assets in China and abroad.
Moreover, the new tax requires every citizen to have a cancellation certificate to leave China. The tax bureau will work together with banks to upgrade the monitoring system. In this way, the Chinese state will be able to monitor and access the bank accounts of large companies, such as Alipay, among others.
Cai Shenkun, a financial commentator, explained that the CCP had spent more than it had collected, which is the reason for such exhaustive control.
Huang Jun, a Chinese economist in the United States, believes that the CCP has two primary purposes for this golden tax system. One is to increase tax revenues, and two is to adjust the distribution of wealth to maintain “social stability” by ensuring the “common prosperity” strategy of forcing the wealthiest citizens to hand over their wealth to the CCP and the people.
“Because the wealth gap is relatively large, many people have a great hatred of the rich,” Huang said.
Huang also commented that the current Chinese tax system has several loopholes when it comes to tax deductions, especially with the filing of invoices, because there is invoice forgery and false declarations of assets, among others, in an attempt to evade the high Chinese taxes.
“The government tax rate is very high, productivity is relatively slow and costs are high,” he added.
The CCP tries to get out of the crisis through tax collection
According to data released by the Ministry of Finance on October 26, the CCP’s fiscal deficit reached a record $1.16 trillion at all levels. From January to September, China’s fiscal revenue fell by 6.6% on a natural basis; tax revenue fell by 11.6%.
The CCP announced on October 18 that China’s gross domestic product (GDP) in the July-September quarter grew 4.9%—a slower pace than expected.
Speculation about higher taxes fueled stock market concerns. As a result, the stock index has fallen about 2%, the most significant loss in just under a month.
The Chinese market, this year, has been considered the worst performer worldwide, which has marked a path toward the search for recovery through taxes.
Widespread weakness in Chinese markets is due to “slower economic growth, both cyclical and structural,” said Redmond Wong, market strategist at Saxo Capital Markets.
The CCP’s “zero-COVID” policy and the decision to delay the release of its key economic indicators have caused instability in the markets.
Analysts believe the weaknesses in Chinese stocks and the yuan stem from the CCP’s debt problems, slowing population growth, and the continued push for its “common prosperity” strategy.