Tax system widening the income gap

Beijing - China's tax system has been blamed for creating a widening income gap by allowing loopholes for big businesses to evade paying taxation, while restricting the development of small businesses through the imposition of heavy taxes.

Under the present system, many Chinese became rich by becoming adept at evading taxes. In contrast, small- and medium-sized enterprises are forced to develop slowly, as they struggle with the burden of being heavily taxed, Economic Information Daily reported on Monday following an exclusive investigation that covered Liaoning, Anhui, and Hunan provinces.

A recently exposed case of tax evasion involved a well-known company in Central China's Hunan province. According to company records, a quarter of its sales revenue is around the 200 million yuan ($29.29 million) mark, but it only declared 19 million yuan to the local tax bureau, the report said.