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Personal income tax on unhealthy path: expert

By Cai Muyuan (chinadaily.com.cn)

Updated: 2015-03-09 17:38:38


China's personal income tax faces marginalization and is on an unhealthy trail of development, Jia Kang, former director of the Research Institute for Fiscal Science, said in an interview with Beijing Times on Sunday.

Many variables are behind taxation and careful and thorough consideration needs to be taken to making a tax policy. "Only 28 million people, 2 percent of the population, are paying personal income tax and if we raise the threshold of it, who will still pay this tax ?" Jia raised the question.

According to Jia, by adding not only salaries but also other incomes into excess progressive mechanism will make the wealthy people pay the highest marginal rates of 45 percent whom at the moment can avoid pay personal income tax of they don't pay themselves salaries. "That will be much more reasonable," Jia said.

Environmental tax

Jia told the reporter that once we change the pollution discharge fees to environmental tax, the mandatory power will be strengthened and there will be punishment. "It is normal if the tax will be levied on consumers," Jia said, adding the government needs to raise the minimum living standard for low-income population if the price of water and electricity will be raised.

"By adjusting the consumption habits, the population will be able to adapt into the price change, thus the low carbon life can be led in the society so that everyone can help with reducing the smog," Jia said.

Property tax

China is likely to complete the legislation process for the taxation system by the end of 2016, and real estate taxes will be implemented in 2017. According to Jia, if to make it easier for the society to accept the new tax system, the property tax should be levied on commodity properties but not affordable housing.

The property tax will not influence the property price too much, Jia said. "The property price might even fall before the implementation because of the expectations. The market price will keep rising but more stable and with less bubble after the implementation," Jia told the reporter.

Import tax

The tax China levies on imported luxury good is not high comparing to some international standard, Jia said. "We don't have the dominant rights on prices, the foreign business owners do. If China lowers the tax then they will lower the price a little bit but raise it again without you knowing," Jia said. Lowering the import tax is giving the benefits to the foreign business owners.

Overseas shopping

The overseas shopping spree will only rise in the near future. To build the consumer's confidences in domestic goods, China should establish the quality and safety of its own brands since not only price, but also safety is in consumers' biggest concern.