Starting from August 28, 2026, the nature of three levies in China — the urban maintenance and construction tax, the education surcharge and the local education surcharge — could begin to change. The Ministry of Finance and the State Taxation Administration released a draft Law on Local Surcharges for public consultation, proposing to consolidate the three levies into a single new tax, the local surcharge tax.
For local finance authorities, this is more than simply combining three names into one. More importantly, local governments would, unusually, gain room to propose their own specific tax rates within a nationally unified range. The local surcharge tax would adopt a rate ranging from 11% to 13%, with the specific applicable rate to be proposed by the people’s government of each province, autonomous region or municipality directly under the central government, decided by the standing committee of the corresponding people’s congress, and filed with the Standing Committee of the National People’s Congress and the State Council.
At almost the same time, plans to reform the sharing of consumption-tax revenues with local governments have been repeatedly discussed, while tax administration and enforcement covering personal and capital income have been strengthened. A series of adjustments at multiple points, all revolving around one question — where local governments will get their money — is now unfolding simultaneously.
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