Since 2013, the central government has uniformly canceled, suspended, reduced, or exempted 496 government funds and administrative fees related to enterprises. At the same time, local governments have canceled more than 600 local fees. As the government continues to clean up and standardize fee items, how do enterprises feel about it? Recently, reporters went to Guangdong, a major manufacturing province, to find out.

Galanz is a well-known local manufacturing enterprise. How much in “fees” does it actually pay in a year? At the reporters’ strong request, the Galanz Group Finance Center produced an itemized list: the main administrative fees and operating fees paid in 2016 involved only about 10 items, of which only 5 were administrative fees. This answer felt somewhat surprising.

One embankment protection fee alone can save tens of millions

“In my memory, there used to be more than 220 national fee items, and later 72 were publicly canceled. Guangdong Province also canceled provincial-level administrative fees, leaving fee items such as family planning, traffic management, and civil aviation, which have little to do with manufacturing enterprises.” A relevant person in charge at the Galanz Finance Center said that in recent years the state and Guangdong Province have introduced a series of fee reduction and exemption measures. For Galanz, there are no longer many fee items; those remembered include commodity inspection fees and intellectual property search fees, and the amounts are not large.

“Among all fee reductions and exemptions, the largest item is the embankment protection fee.” The person in charge said that before 2015, Galanz had to pay about 10 million yuan in embankment protection fees each year. Starting April 1, 2016, the embankment protection fee was exempted, saving the enterprise a considerable amount. It is understood that in order to strengthen river embankment improvement and maintenance and improve urban flood (tide) control capacity, local governments levy embankment protection fees in accordance with the law. Previously, most provinces and municipalities such as Beijing, Shanghai, Tianjin, and Liaoning were collecting them.

Behind the positive changes, what efforts were made? Since 2016, Guangdong has made great efforts in decisions and arrangements to reduce non-tax burdens such as fees:

——35 policy measures in seven aspects, with the implementation of the action plan for cost reduction under supply-side structural reform, reducing tax burdens, institutional transaction costs, and production factor costs;

——34 administrative fee items were canceled, achieving “zero fees” for enterprise-related administrative fees set by Guangdong Province;

——the amount of fees reduced or exempted for enterprises throughout the year was about 12.95 billion yuan. The cancellation of the embankment protection fee alone reduced fees by 8.11 billion yuan.

Zeng Zhiquan, director of the Guangdong Provincial Department of Finance, said that in terms of enterprise-related administrative fees, in recent years more than 400 items (instances) have been canceled, exempted, deferred, or had their charging standards lowered, reducing the burden on enterprises by more than 30 billion yuan in total. On the one hand, the central fee reduction and exemption policies have been strictly implemented, especially for small and micro enterprises (including individual businesses), exempting 42 items such as housing registration fees; on the other hand, policies have been introduced in light of the province’s actual conditions. For example, starting May 1, 2014, all enterprises in the province were exempted from 39 provincial-level revenue items such as mineral resource compensation fees, reducing the burden by about 2.3 billion yuan each year.

“Take the embankment protection fee. This is a fee item with the project set by the central government and the standard set by the province. We fully demonstrated and studied whether to reduce or exempt it and listened to opinions from various localities and enterprises. Although reducing or exempting this fee puts considerable pressure on government revenue in some areas, considering that this fee is a relatively heavy part of the administrative fees paid by enterprises, we still made up our minds to reduce or exempt it and loosen the bonds on enterprises.” Zeng Zhiquan said.

Strengthen supervision and enhance enterprises’ sense of gain

Many fees have been reduced or exempted, so among the fees enterprises still pay now, what are the major expenditures?

At present, Galanz has only two relatively large expenditures: first, the education surcharge, which exceeded 12 million yuan last year; second, the local education surcharge, with an expenditure of 8.5 million yuan. In the view of the relevant person in charge at the Galanz Finance Center, if these two items could be reduced or exempted, “it would be perfect for enterprises.”

These two fees essentially belong to government fund items established by the state. “According to relevant provisions, the authority to reduce, exempt, defer, suspend, or cancel the remaining administrative fees and government fund items all rests with the central government, and local governments no longer have the authority to reduce or exempt them on their own.” Zeng Zhiquan said that the next step will focus on implementing various fee reduction policies and strengthening supervision so that enterprises have a stronger sense of gain from the fee reduction policies.

Fee reductions benefit enterprises, but will this affect Guangdong’s general budget revenue?

“Our non-tax revenue has always been managed under the ‘two lines of revenue and expenditure’ system. After being turned over to the state treasury, it is incorporated into the general public budget for coordinated use. However, from the perspective of the impact on local fiscal revenue, taxes remain the main source of Guangdong’s fiscal revenue, and the proportion of non-tax revenue, especially administrative fee revenue, is very small.” Zeng Zhiquan said.

Intermediary service fees are a prominent problem

Fees have been reduced, so what is the saved money used for? After the burden is eased, where do enterprises focus their attention?

“It should be more than 10 million yuan! This is what we gained in 2016 from cleaning up and reducing administrative fees. Last year’s R&D expenses increased by 30 million yuan compared with 2015, which was especially encouraging.” A relevant person in charge of Galanz’s planning department said.

Since fee reductions have many benefits, should fees be reduced or exempted indiscriminately regardless of specific circumstances? Zeng Zhiquan believes that some administrative fee items are acts of strengthening management through economic means and currently still need to exist. For example, when an enterprise files a lawsuit with a court, it must pay litigation fees; when a pharmaceutical enterprise applies for drug registration, it must pay drug registration fees. If all these fees were exempted and funds were allocated from fiscal revenue, the relevant costs of enterprises would instead be borne by ordinary taxpayers, which would not be entirely fair or reasonable. Therefore, necessary fees should be charged, but they must have a legal basis, be reasonable and standardized, and be open and transparent.

However, some enterprises also reported that relevant departments should attach great importance to some operating fees, especially some intermediary service fees. In some business activities such as demonstration, customs declaration, and commodity inspection, enterprises must deal with intermediary service agencies. At present, administrative departments generally do not designate which agency enterprises must use. But enterprises feel that to get things done, “there is no choice of intermediary agency, and no room to negotiate the price.”

The survey found that, overall, the fee burdens enterprises feel are relatively heavy are mainly operating service fees, intermediary service fees, and other categories of fees. These are not government fees and are not government non-tax revenue. At present, the departments in charge of operating service fees and intermediary service fees in Guangdong are actively carrying out cleanup work.