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Rich to be taxed?
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PEOPLE’S Daily reports that efforts will be stepped up to reform the current personal income tax scheme to make it more equitable.
Citing a senior official from the Ministry of Finance, the newspaper reported recently that various proposals are under discussion.
The current scheme has been criticized during previous meetings of the National People’s Congress because more than two thirds of tax revenue are contributed by medium- and lower-income families, rather than the rich.
In China, tax is automatically deducted from wages by the employer. Wealthier citizens are generally exempted because very few rich people amassed their fortune on the basis of their wages. By comparison, the medium- and lower-income families derive almost all their income from wages.
There are calls to raise the threshold income tax level. In 2011, the threshold was raised to 3,500 yuan (US$570) from 2,000 yuan, but that increment has long been overtaken by inflation and soaring living costs. Some proposals call for a threshold of 5,000 yuan.
Another approach to redress is to find ways to effectively tax higher-income citizens, whose wealth is generally created by operating businesses, playing the capital market or speculating on real estate.
However, efforts to tax the rich will probably be vigorously resisted by powerful vested interests.
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