Time to tax gray income

(China Daily)
Updated: 2007-04-07 09:53

Personal income taxation should include gray income, said a signed article in International Securities News. An excerpt follows:

This is the first year the State Administration of Taxation (SAT) has required high-income earners, who earn more than 120,000 yuan (US$15,400) a year, to declare their annual income. The deadline was April 2.

Judging from the results, only a small proportion of top earners have filed personal income tax statements, with wage earners accounting for the majority. Private business owners, freelancers and those in high-income trades were not active in filing statements.

WaWage earners have long been the main force in personal income taxation. For example, salaried workers contributed nearly 75 percent of personal income tax in Nanjing, Jiangsu Province. This is because most workers' salaries are paid directly into their bank accounts, which are monitored by the taxation department.

But the incomes of top earners are not that transparent. There is a large proportion of gray income. The government should improve its collection of taxes from top earners.

Personal income tax is an important source of fiscal revenues and also a major means to adjust income distribution. No one would normally file gray income. But the core of the income gap lies in this.

To take a laissez-faire attitude towards such grey income will make the introduction of these statements futile.

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