Division over income tax reform
Source: Xinhua |
May 19, 2011, Thursday
|
Print Edition
Print Edition
THE public remains divided over the proper income tax threshold after a proposed income tax cut was publicized on April 25.
Few oppose the cut itself or a raising of the threshold, but the debate is centered on whether elevating the threshold to 3,000 yuan (US$307) from 2,000 yuan will achieve the goal of fairer income distribution.
In addition, an amendment to the income tax law, which was not adopted in its first reading by China's top legislature in late April, seeks to cut the number of tax brackets from nine to seven and also lower tax rates for low- and medium- income groups.
Currently, 28 percent of wage earners pay individual income tax, but if the amendment is passed, that figure would be reduced to 12 percent while government tax revenues would decrease by 120 billion yuan a year.
The government sees the income tax cut as a way to tackle the wide gap between rich and poor and to produce a fairer income distribution, both of which are seen as high priorities for the country over the next five years.
By yesterday, 225,000 recommendations to the amendment have poured onto the website of the National People's Congress, which is welcoming public feedback on the issue until May 31.
On Weibo.com, a twitter-like microblog, a search on the income tax threshold has received more than 120,000 hits, and a search on the income tax amendment has accumulated 150,000 results.
Some doubt comes from low-income groups for whom the tax cut would to benefit.
Jia Cheng, a Beijing resident, said the 3000-yuan threshold might be too low to exempt most migrant workers on construction sites, as the minimum salary in Beijing has been raised to 1,160 yuan.
Many people say living costs and high housing prices are eroding their income and want a threshold of 4,000 yuan or 5,000 yuan.
China's consumer price index, a major gauge of inflation, jumped by 5.3 percent in April year on year, which followed a 5.4 percent hike in March, its sharpest rise in nearly three years. Some price officials have warned that the inflation rate may remain high for the second quarter of this year.
But two experts said that calls for a 5,000-yuan or even higher threshold lack statistical support. Zhu Qing, a professor with the School of Finance at the Renmin University of China, said the minimum income required to pay income tax usually accounts for 24 to 40 percent of an average monthly salary in developed countries.
Under the draft amendment, however, the proportion in China is 107 percent, significantly higher than that in developed countries, he said.
Sun Gang, a finance expert with a research institute of the Finance Ministry, said that the change in threshold should be in line with that of the CPI.
China began to collect personal income taxes in 1980 with a threshold of 800 yuan.
Few oppose the cut itself or a raising of the threshold, but the debate is centered on whether elevating the threshold to 3,000 yuan (US$307) from 2,000 yuan will achieve the goal of fairer income distribution.
In addition, an amendment to the income tax law, which was not adopted in its first reading by China's top legislature in late April, seeks to cut the number of tax brackets from nine to seven and also lower tax rates for low- and medium- income groups.
Currently, 28 percent of wage earners pay individual income tax, but if the amendment is passed, that figure would be reduced to 12 percent while government tax revenues would decrease by 120 billion yuan a year.
The government sees the income tax cut as a way to tackle the wide gap between rich and poor and to produce a fairer income distribution, both of which are seen as high priorities for the country over the next five years.
By yesterday, 225,000 recommendations to the amendment have poured onto the website of the National People's Congress, which is welcoming public feedback on the issue until May 31.
On Weibo.com, a twitter-like microblog, a search on the income tax threshold has received more than 120,000 hits, and a search on the income tax amendment has accumulated 150,000 results.
Some doubt comes from low-income groups for whom the tax cut would to benefit.
Jia Cheng, a Beijing resident, said the 3000-yuan threshold might be too low to exempt most migrant workers on construction sites, as the minimum salary in Beijing has been raised to 1,160 yuan.
Many people say living costs and high housing prices are eroding their income and want a threshold of 4,000 yuan or 5,000 yuan.
China's consumer price index, a major gauge of inflation, jumped by 5.3 percent in April year on year, which followed a 5.4 percent hike in March, its sharpest rise in nearly three years. Some price officials have warned that the inflation rate may remain high for the second quarter of this year.
But two experts said that calls for a 5,000-yuan or even higher threshold lack statistical support. Zhu Qing, a professor with the School of Finance at the Renmin University of China, said the minimum income required to pay income tax usually accounts for 24 to 40 percent of an average monthly salary in developed countries.
Under the draft amendment, however, the proportion in China is 107 percent, significantly higher than that in developed countries, he said.
Sun Gang, a finance expert with a research institute of the Finance Ministry, said that the change in threshold should be in line with that of the CPI.
China began to collect personal income taxes in 1980 with a threshold of 800 yuan.
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