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Narrowing widening income gaps ought to be focus of tax reform

(China Daily) Updated: 2015-12-28 08:52

Narrowing widening income gaps ought to be focus of tax reform

A Chinese clerk counts RMB (renminbi) yuan banknotes at a bank in Huaibei city, East China's Anhui province, January 22, 2015.[Photo/IC]

The central authorities have recently published a plan on tax reform that echoing the public calls for a personal income tax system that aims at collecting more from those with high incomes. That's still unfair because those in the so-called high-income group are still wage earners, while those getting profits from properties can easily evade tax, says a Southern Metropolis Daily:

Income tax is meant to make wealth distribution fairer. However, in China it makes it more unfair because wage earners pay the majority of income tax, while property holders enjoy lower tax rates.

Worse, income tax is taken from people before they get their monthly wages, while rich people can evade tax in various ways. For example, entrepreneurs can mix their property income with corporation business revenue, while reports show certain celebrities don't pay tax on the money they receive for advertisements. That's why people say China's personal income tax subsidizes the rich at the cost of the poor.

It should also be noted that 70 percent of China's taxes are indirect taxes, which are ultimately paid by ordinary people when they consume daily goods. Besides, people do not get education and other spending offset against their pay, which is contrary to common international practice.

The new plan fails to change any of this. It intends to collect more tax from people earning high salaries following the principle of convenience for tax collectors, instead of the rights of taxpayers.

Individual social security numbers were introduced in February, which gave people both duties and rights: the duty to pay tax, and the right to get public services and social welfare. The reality is tax is collected every month while public services lag far behind.

The purpose of tax reform should not be collecting more money from ordinary people, but narrowing income gaps and better protecting taxpayers' rights.

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