Township officials in the northern city of Hejian have been randomly charging and collecting taxes from self-employed businessmen, Chinese media have reported.
Dozens of self-employed business people in Liminju township of Hejian, Hebei Province, recently received extra tax demands ranging from tens of thousands to hundreds of thousands of yuan, China Central Television (CCTV) said on Wednesday.
"Every month the local office of State Administration of Taxation transfers 600 yuan ($98.82) from my account to its account," an unnamed businessman told CCTV.
As self-employed businessmen have unstable incomes, any tax should only be collected after verifying their income, Zhang Bin, a deputy research fellow of the Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences in Beijing, told the Global Times on Thursday.
"Businessmen have to pay different types of tax, like value-added tax, where the amount of the payment is based on the verified turnover of the business," he said.
The township's small businessmen were ordered to pay more tax or have their electricity cut, the CCTV report alleged. They could also bargain over repayment with the government.
Song Jinting, the owner of a glassware workshop, faced closure risk for failing to pay quickly enough.
"The government asked me to pay 12,000 yuan - 7,200 yuan was 'annual payment' plus another 5,000 yuan - but they could not name the category for the 5,000 part," Song said.
A day after he refused to pay, the tax was raised to 60,000 yuan, he said. Song's workshop was shut down on the third day by the local government.
Several days later, a local government official returned with a reduced tax bill of 5,000 yuan. Song paid and his workshop reopened.
That was illegal, Cai Jingfeng, a lawyer at the Shenzhen-based Gongyang Law Firm, told the Global Times. Only the local taxation authorities have the right to punish Song, he said.
The State Administration of Taxation on Monday urged taxation authorities to collect tax according to laws and never collect excessive tax.