Monopoly sales of alcoholic beverages were a main mode of administration of brewing industry in late Tang Dynasty, Song Dynasty, Yuan Dynasty and late Qing Dynasty.
In history, monopoly sales of alcoholic beverages had a particular feature in North Power and South Power of Song Dynasty. The Monopoly sales in North Power of Song Dynasty had various modes. According to historical records, there were two modes in general then in addition to the contract-system mode.
Monopoly Sales of Qu. Monopoly sales of Qu meant that the official agency monopolized the production of Qu. For Jiu Qu was the necessary essential raw material in brewing of the alcoholic, therefore monopoly production of Jiu Qu equaled monopoly production of alcoholic beverages. Citizens purchased Jiu Qu from the Qu production agency run by the government then began brewing by themselves. The government would tax the alcoholic beverages brewed by those who bought Jiu Q from the official agency. This mode of monopoly sales was mainly carried out in such big cities as Dongjing (Bianliag, the capital of North Power of Song Dynasty,) Nanjing (Shangqiu) and Louyang and the like.
Monopoly Sales of Alcoholic Beverages. This official agency set up some breweries and distilleries to produce alcoholic beverages and some stores to do alcoholic beverage deals. No citizens were allowed to buy and sell alcoholic beverages and the official agency classified them and fixed their prices.
3). Alcoholic Beverage Taxation
It was a special tax on alcoholic beverages. The special tax was different from general business taxes. The Alcoholic beverage tax was much heavier compared with other business taxes because alcoholic beverages were regarded as luxuries. Before Han Dynasty, there were only general business taxes, and no special alcoholic beverage tax. During late Qing Dynasty and Guomindang Power period, there existed a specially- permitted license tax on alcoholic beverage businessmen and sellers. etc. From the time when Emperor Zhou issued ¡¶Forbidden-drink Document¡· to the period before Emperor Han Wu Di exerted state monopoly sales of alcoholic beverages in his early power period, the rulers didn't view administration of brewing industry as an important means of collecting wealth and property.
In Qin Kingdom where Shan Yang hold a position of prime minister, the basic policy to encourage development of agriculture and limit development of commerce was being carried out. ¡¶Shan Jun Su. Ken Ling Pian¡· ( An order of Development of Agriculture in the works by Shan Yang) stipulated that alcoholic beverages and meat should be fixed and sold at a high price, and their tax should be as ten times high as their cost. In a document of Qin Kingdom entitled ¡¶Qiu Lu . Tian Lu¡· ( Laws of Land in Qin Kingdom, ) there was a regulation that peasants living by farming were not allowed to brew alcoholic drinks, those against the regulation would receive punishment. There were two main points in Qin Kingdom's administration of brewing the alcoholic drink; that is to say civilians were forbidden to brew the alcohol, and the alcoholic was sold at a much higher price than its cost with high prices and high taxes being exerted on the alcoholic drink, the aim was to limit or control production consumption of alcoholic beverages by means of economic measures and severe regulations, encouraging citizens to farm more grains; meanwhile the government could obtain a huge number of financial revenue by fixing high prices and raising high taxes.
4). Officially-Permitted Special Taxation of Alcoholic Beverages in Tang Dynasty
Forbidden-drink policy would no doubt result in great damages to brewing industry, alcoholic beverage business lessened, even no deal tax raised. In the first year of Dai Zhong's powers, an Lushan's Revolt was supressed at last, the government of Dai Zhong's Power deliberately set up new taxes on different items and raised exorbitant taxes and levies in order to pay the military expenditure and support the imperial family and its officials. According to records of ¡¶New Tang Su. Yanzhuan¡·, the ways of taxing on goods then developed into making one's hair standing on end, the tax on perished item not canceled, repeated tax not cut down, new and old taxes added together ¡¤¡¤¡¤ In order to insure the national financial revenue, the alcoholic beverage taxation which was exerted 180 years before was brought back into use. In the 2nd year of Dai Zhong's Power, an imperial order was given to register all the brewers and breweries in the country and the registered brewers and breweries were required to pay the alcoholic beverage tax. ( ¡¶Tang Su. She Huo Zi¡·It was in the same record that all the registered breweries were ordered to contribute their monthly tax on alcoholic beverages . Besides, all the prohibition regulations on the alcoholic were canceled, which suited both official and non- official brewers and breweries.
The alcoholic beverage taxation of Tang Dynasty could actually be concluded the registration of breweries and alcoholic beverage stores with the government, and classification of them according to their management scales, then these registered breweries and stores could share the privilege to do alcoholic beverage business. Those not permitted by the government had no right to brew and deal alcoholic beverages. In the year of Dali Six, the alcoholic beverage tax was collected by local governments, then contributed in turn to the central government. A specially exerted method was to substitute alcoholic beverage tax raised by local governments for the contributions of cloth and silk to the central government.
5). Other Modes of Administration of Alcoholic Beverages
(a). Centralization Mode of Brewing Alcoholic Beverages was a flexible management of brewing. i. e. The official agency set up central breweries with brewing tools. Citizens could bring grain themselves to the central breweries to brew alcoholic beverages, and based on the quantities the official agency raised a certain sum of fee-tax.
(b). State Monopoly Sales and Additional Farming Tax Ran Paralleled
In 811 A.D. (in the year of Yuan He Six) , there was a bumper harvest of crops, and corn price declined sharply in some places. Since there was much grain, brewing of alcoholic beverage must be widespread, which, in turn, resulted in the decline of alcoholic beverage price. If the original policy had not be changed that a dou of alcoholic beverage ("dou". was a Volume unit in the past China) was still taxed 150 yuan, breweries would have gone bankrupt. The rulers adjusted their alcoholic beverage policy to the practical situations in time. In the same year, all the official breweries stopped production in the capital of the government, there was no forbidden- drink regulations. The officially-registered breweries still had to pay alcoholic beverage tax, for those common people, if they had adequate grain and food, they could brew the alcoholic for their own use without obtaining the official permission or paying alcoholic beverage tax. But all the peasants should pay a kind of additive farming tax according to their owning land. This policy was actually to distribute the alcoholic beverage tax evenly to all the people and the government even collected more. In the areas where the alcoholic beverage tax and additive farming tax ran paralleled, there were no officially -run stores for selling the alcoholic. This policy was similar to the free brewing-and-sale policy exerted in the early period of Tang Dynasty, but the monopoly sales and alcoholic beverage taxation had been changed into the additive land taxation. This policy not only softened people's complaints and resentments against the officially- run breweries and officially-permitted alcoholic beverage stores, but the government could increase the financial revenue.
6). Punishment Regulations for Those Against State Brewing Industry Policy
Punishment regulations were the necessary measures to insure the governmental policy of brewing industry to be smoothly exerted. When the government carried out monopoly sale of alcoholic beverages, alcoholic beverage taxation, and forbidden-drink policy, those private brewers and breweries without official permission would receive certain kinds of punishment, some would be fined confiscation of brewing tools and wares and brewing incomes and some would be fined some money; some would even receive the death penalty.
Administration of Alcoholic Beverages in the Period of 1911-1949
The Public of China could be divided into two periods -- Beijing Government controlled by the Northern Warlords (1912--1927) and Nanjing Government. Beijing Government's Administration of State Monopoly Sale of Alcoholic Beverages. During the early period, Beijing Government followed the conventional taxation of alcoholic beverages carried out by late Qing Dynasty, some traditional alcoholic beverage taxes being still used, on the other hand, it established some new alcoholic beverage policies in reference to western countries' alcoholic beverage taxation. The main point of them was " State Monopoly Sales of Alcoholic Beverage."
State Monopoly Sales of Alcoholic Beverages started in 1915, the administration agency responsible for the exertion of the system was the Tobacco and Alcoholic Beverage Monopoly Sale Bureau (Shortened TABMSB ) of Beijing Government and that of local governments all over the country. The setup of the administration agency is as the following shows:
TABMSB of Beijing Government
Provincial TABMSB
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Branch of TABMSB
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Section of TABMSB
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Office of TABMSB
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Contract Businessmen ( Specially Permitted )
In May of the same year, Temporary Provisional Regulations of TABMSB were issued. In June, the Provincial Regulations of TABMSB and Check Regulations were made. In August, Fee collection Regulations of monopoly sales of tabacco and liquors were also made, which went paralleled with Temporary Provisional Regulations. The section and office of TABMSB were in the course of organization at the same time. The detailed operations were that all the tobacco and alcoholic beverage business activities should be checked and monopolized by the official agencies of TABMSB, the business of alcoholic beverages should be monopolized by the section or office of TABMSB. As to the alcoholic beverage sales, the cost, profit and different taxes should be checked and calculated by TABMSB based on the production and sales, then a selling price was fixed, issued monthly and informed of all the section and offices to carry out. All the sections and offices, in accordance with the price fixed by TABMSB, dealt with dealing affairs within its own district. All the stores within a certain administrative district should report the quantity and sorts of production and sales of alcoholic beverages, and pre-estimation of these business affairs to the section of office. The section or office, after receiving the reports, would go to check and add the TABMSB's stamp and mark on the items, fill up quadruplicate lists and raise monopoly sale tax on behalf of the government. The monopoly sale tax rate varied from 10% to 50% of the alcoholic beverages' selling prices (sales price + monopoly sales tax = monopoly sales price).
The state monopoly sales system carried out by Beijing Government was, after all, a specially- permitted administrative system. The government needn't provide funds, places, didn't directly manage production, purchase, transportation and sales of alcoholic beverages, those specially-permitted merchants-managers of Section or Office of TABMSB entrusted should be responsible for dealing with the business related to alcoholic beverages. The manager should first pay a certain sum of cash pledge to the body of TABMSB. After permitted, he would be issued a specially -permitted license. In 1926, Beijing Government issued ¡¶Regulations on Purchase and Sales of Alcoholic Beverages¡·-- stipulating that the alcoholic beverage whether domestically made or abroad would be taxed 20% of the selling price. The shops doing purchase and sales of alcoholic beverages should be included to pay the tax. In the following year, ¡¶Regulations of Taxation on Breweries and Distilleries¡· was also issued, stipulating all the breweries, wineries and distilleries should be taxed 10% of producer price. This shew that a two- tax system was primarily established -- a tax on sales and a tax on production.
The monopoly sales regulations of Beijing Government were only exerted on production and sales of Chinese alcoholic beverages, but not on the foreign beer. For the imported alcoholic beverages, only customs were collected. In 1926 (in the 15th year of Guomingdang), the imported and copied-in-China alcoholic beverages started to be taxed 20% of selling price.
State Monopoly Sales System of Nanjing Government
In 1927, Nanjing Government was founded, in June, "Temporary Regulations on state Monopoly Sales of Tobacco Alcoholic Beverages was issued, stipulating merchants were responsible for the business activities under the official supervision. Its organization structure was almost the same as that of Beijing Government.
The collection tax rate of monopoly sales was fixed at 20% of selling price, revised per year. In the same year, ¡¶Provincial Bidding Regulations on State Monopoly Sales of Tobacco and Alcoholic Beverages¡· was also issued , stating the competition of tender should be operated openly, admitting those offering the highest price as the winners, who should pay a sum of 20% of the total year's business amount as the pledge cash. The contractor should pay no less than 1/12 of the offering price as the tax per month.
In August, 1929, the ¡¶Regulations¡· were again revised, the newly-revised ¡¶Regulations¡· was issued. Meanwhile ¡¶Checking Regulations on State Monopoly Sales of Tobacco and Alcoholic Beverages¡· and ¡¶Penalty Regulations on State Monopoly Sales of Tobacco and Alcoholic Beverages¡· were made. There was a striking difference between the newly-revised ¡¶Regulations¡· and the old one. In the newly-revised ¡¶Regulations¡·, the original body ¡¶Provincial Bureau of State Monopoly Sales of Tobacco and Alcoholic Beverages¡· had been changed into ¡¶Tobacco and Alcoholic Beverages Business Bureau¡·, and ¡¶State Monopoly Sales Section¡· changed into ¡¶State Monopoly Sales Business Checking Office¡·, the original office abolished. The newly-revised Regulations stipulated that both producers and merchants of tobacco and alcoholic beverages should apply to the Section or Checking Office for registration and make tables of production on sales of sorts and quantity of tobacco and alcohol beverages, then present them to the authorities. The selling prices were decided by provinces. The monopoly sales tax was fixed 20% of the selling prices, which was revised per year.
In 1929, the machine-made alcoholic beverage tax was changed to the Foreign alcohol tax by Nanjing Government, due to the narrow rang of meaning stating ¡¶Temporary Regulations Taxing on Foreign Alcohols ¡·. The foreign alcohols sold in China (including Chinese-copied or foreigner -made or imported foreign alcohols) would be taxed 30% of the selling price directly collected from the merchants who did the business, and the producers or wineries wouldn't be taxed. ¡¶ Checking Regulations of Taxing on Foreign Alcohols¡· and ¡¶Penalty Regulations on Taxing on Foreign Alcohols¡·came into practice parallel to ¡¶Temporary Regulations of Taxing on Foreign Alcohols¡·.
Taxing on Alcoholic Beverage Wineries
For thousands of years Chinese brewing industry scale was rather small because of less development of capitalist economy. During late Qing Dynasty, the machine was used in making foreign alcoholic beverages and beer in China, administration of alcoholic beverages had some reforms by introducing some foreign administrative methods, one of which was taxing on alcohol producers or wineries or breweries. Taxation on foreign alcohols and beer, which originally was collected from dotted merchants, then changed into collecting from the producer, was great progress. It went in agreement with the historical tendency that brewing industry was developing in a large scale. Taxation on alcoholic beverage producers and taxation on officially-licensed merchants doing the business of tobacco and alcoholic beverages founded the modern taxation basis in China.
In 1932 , ¡¶Regulations of Taxing on Alcoholic Beverage Producers¡· was issued and put into practice. The taxing percentage was up to 30% of producer price, taxed only once, valid throughout the country, which was in the charge of an official sent by Monopoly Sales Bureau stationing in the distillery or winery. Each day the producer should reported the true quantity of sales of the alcohol to the official stationing in the winery who was responsible for checking and making a list to present to his supervisors for checking by the end of each month. At the end of each month the producer should list the whole quantity of sales and total taxes sum and present them to the responsible official agency for check and collection..
In the same year, ¡¶Temporary Regulations of Taxing on Beer and Action Regulations of Officials Stationing in the Winery Responsible for Collection of Tax¡·were also made. Since then the tax in beer and tax.
Collection of Tax on Officially-licensed Firms Doing Deals of Tobacco and Alcoholic Beverages
In 1932, ¡¶Temporary Regulations on Taxation of Officially-licensed Firms Doing Deals of Tobacco and Alcoholic Beverages¡·was issued. The Regulations covered all the alcoholic beverages made and sold in China, divided into wholesale and retail. The wholesale firms, according to the business scale, were divided into three classes -- the first class' business totality over 2000 dan (a weight unit of " dan" equals 50 kg) per year, taxed 32 silver dollars each season, the second class' business totality between 1000 and 2000 dan, taxed 24 silver dollars each season; the third class' business totality under 1000 dan, taxed 16 silver dollars each season. Retail firms were divided into four classes, taxed 8 silver dollars, 4 silver dollars and 2.5 silver dollars respectively. The ¡¶Regulations¡·also made clear the assignment of tax on officially-licensed firms doing deals of foreign alcohols -- one -tenth of the total tax income raise by the central government was kept for the central government , the rest was given to the local government as the local financial revenue. In July, 1935, the tax on officially-licensed firms doing tobacco and alcoholic beverage business was turned into local tax income raised by the provincial government or municipal government. In 1943, the central Government of Guomingdang took back the local taxes, issuing an order abolishing the officially-licensed tax, and changing it into collection of common business tax. There was non-existence of the officially licensed tax since then.
In 1934, ¡¶Checking Regulations on Fixed Tax on Domestic Alcoholic beverages¡· was issued, the tax rate of them varied with different provinces and areas.
In 1936, ¡¶Finance Ministry's Revised Temporary Regulations of Tax on Beer¡· was declared, the Administration Bureau of Taxation was responsible for the beer tax, sending the agent stationing in the winery for check and supervision. The beer tax varied with the producer price, its rate was 20%. In the following year, the beer tax income was different because it was collected based on the different marketing prices. Later it was changed into collection based on the sales.
In 1937, the Anti-Japanese War broke out, Guomingdang Government increased the domestic alcoholic beverage tax by 50% in all provinces for the excuse that the government was in war and badly needed financial revenues.
Tax on Domestically-made Alcoholic Beverages
In 1941, ¡¶Temporary Regulations of Taxation on Domesticly-made Tobacco and Alcoholic Beverages¡· was issued, it stated that the taxes belonged to the national taxes, collected by the agencies under the supervision of the National Taxation Administration Bureau of Finance Ministry responsible for collection. The taxes on tobacco and alcoholic beverages were raised only based on the average selling price of production areas, valid throughout the country, no local governments were permitted to tax on them again. That was called unifying taxation, which meant an article was taxed once, after being taxed, the article could flow freely on the market everywhere in the country, and couldn't be taxed again for any excuse. The Unifying Taxation equaled the production tax, the same tax rate was performed in the whole country, and on both Chinese merchants and foreign merchants. The performance of Unifying Taxation on domestically -made alcoholic beverages marked the end of state Monopoly Sales.
The Regulations made in 1941 also stipulated that alcoholic beverages were taxed 40% of average marketing price of production area nearby, its calculation formula was: Average market wholesale price of production area ¡Á 100%= the fixed price taxed +.
In order to match the ¡¶Temporary Regulations¡· made in 1941, ¡¶Temporary Procedures of Taxing and Checking on Domesticly-made Tobacco and Alcoholic Beverages¡· was issued by the Finance Ministry, stipulating the taxing procedures, methods of transtaxation on tobacco and alcohol beverages or free taxation and rules of check and penalty..
In 1942, ¡¶Ways of Tax Contract of Domesticly- made Tobacco and Alcoholic Beverages¡·was issued by the Finance Ministry, stipulating the taxing procedures, methods or free taxation and rules of check and penalty.
In 1942, ¡¶Ways of Tax Contract of Domesticly -- made Tobacco and Alcoholic beverages¡·was tried out, firstly exerted in Guangxi Province, then spread in Sichuan Province. Guizhou Province and Jiangxi Province one after another. This kind of taxation was somewhat similar to the tax- contract system exerted in the countryside of Song Dynasty. It was rather hard to perform it. So the taxation was ended in 1945.
In September, 1942, Finance Ministry issued ¡¶Temporary Rules of Supervision of Domesticly- made Alcoholic Beverages¡·, which stipulated that the producers of alcoholic beverages should be registered again, those not officially permitted were not allowed to brew alcoholic beverages. Those breweries whose yearly production totality was below 24000 jin (a jin equals half a kg.) were not qualified to register.
After the victory of the Anti-Japanese War , some clauses of ¡¶Temporary Rules¡· were revised, the main purpose of doing so was to raise the tax rate. It was perhaps caused by the fact that rate of Chinese alcoholic beverages and foreign alcohols were both considered lower in comparison with the tax rates in other countries. In 1946, at the Second Plenary Session of Guomingdang Central Committee, a decision to raise the luxury tax was passed by the reason of reconstruction after the victory costing more money and enriching the national financial revenues to balance the income and expenditure. The tax on Chinese alcoholic beverages was increased up to 80% of selling price and the tax on foreign alcoholic drinks and beer was increased up to 100% of selling price ( the tax rate of both foreign alcohols and Chinese alcoholic beverages was 60% of selling price during the Anti-Japanese War ). In August, 1946, Guomingdang Government issued ¡¶Taxing Regulations of Domesticly- made Tobacco and Alcoholic Beverages¡·, which stated that alcoholic beverages should be grimly taxed at a rate of 80% of the average producer price checked in the production area . (Some related data in this chapter was abstracted from ¡¶Chinese Alcoholic Beverage Monopoly Sales ¡· published by Chinese Commercial Press.)
