Tax cut not a good idea in changed scenario

Recently, the State Administration of Taxation announced that it would waive taxes worth 20.2 billion yuan ($2.9 billion) to support the reconstruction in the regions affected by the earthquake in Sichuan on May 12.

This tax reduction has more or less ignited the public expectation of a further tax cut, especially in view of the fact that the growth in the government income has outpaced the GDP growth in the last several years.

Admittedly, the State coffer seems to be quite full at this moment. The government income in 2007 was 5.13 trillion yuan, 723.9 billion ($104.9) more than the budgeted annul income.