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January 16, 2016

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Park trying to increase profits raises issue of lacking taxation

A recent brouhaha at our city’s Gucun Park in Baoshan District, famous for its springtime cherry blossoms, is providing food for thought on the issue of public spaces, and what responsibilities our city and we as local citizens have for supporting these places. The case revolves around the park’s decision to rent out a large section of its space to a private company, which then rented the area out for wedding parties.

It’s clear that park managers are trying to raise more money. But what’s less clear is whether they did so because of budget shortfalls, or simply because they wanted to earn more than the 20-yuan ticket price that people pay for admission.

For me the case spotlights two particular matters that always leave me a bit vexed in modern Shanghai and China in general. The first is the insatiable desire to earn more money among nearly any enterprise, be it a restaurant, clothing shop or in this case a public park. The second is the constant call by local citizens for more and better public services, but then their concurrent resistance to paying taxes that in the West are the main funding source for providing such services.

None of these contradictions surprises me much in today’s Shanghai, mostly because concepts like earning profits and paying taxes are not so new here. For that reason, people often react to such ideas in extreme ways, in this case by putting profits ahead of everything else or by avoiding paying taxes as much as possible.

The current venture at Gucun came under fire after some of the visitors complained they were unable to visit the area now rented out for weddings, even though it was within the park. Finally, the park started allowing regular visitors into the area earlier this week. One manager said the park made the move to earn extra income because local government subsidies were insufficient to cover operating costs.

The idea that parks should charge entrance prices and have opening hours is already quite foreign for many Westerners, since most of our parks are open spaces without gates or fences, allowing people to freely enter and exit at any time.

But in China, many such parks and other popular tourist spots often charge entry prices, partly because they need the money to support their operations. Part of the problem is insufficient funds from city and district governments, which lack the wide range of financial resources that counterparts in the West get from taxes on everything from real estate to retail sales and personal income.

Of course no one in the West loves to pay those taxes, but all of us do without protest because we know the money is used for things that benefit us. Here in Shanghai people also want all those things. But no one seems to think they have a responsibility to fund such activities by paying taxes, and most people seem to feel the government should find some other way to raise the money.

Then there’s the issue of profits, and the insatiable appetite that just about any enterprise has for earning as much money as it possibly can, even when it already has sufficient funds to operate comfortably. In this case, the park actually rented out space to six businesses until recently, but shut down all but the wedding venue under pressure from the city’s greenery authority.

I haven’t seen the park’s accounting records, so I can’t comment on how much money it was making or losing. But obviously it continues to function even after losing the money it was getting from the five businesses that recently closed, so it’s doubtful it was tottering on the brink of insolvency. And even if the extra income was an important contributor to its budget, everyone encounters such challenges and simply adjusts by finding ways to cut costs.

At the end of the day, all of us have budgets that we have to live within, and we have a responsibility to follow rules and adhere to certain principles even as we try to maximize our income. At the same time, the people of Shanghai should also realize that nothing comes without a price, and that the many public services we enjoy can only come if the government has the financial resources to pay for them.


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