Income tax reform can help boost growth

Policymakers have been fairly quick in cutting taxes to cushion domestic businesses against the ongoing economic slowdown. But they should also aggressively promote much-talked about reforms in individual income tax to facilitate the country's transition toward consumption-led growth.

To help domestic enterprises survive the country's painful but necessary economic transformation, value-added tax reforms were introduced that have saved hundreds of billions of yuan for companies in sectors including transportation and telecommunications and cut the tax bills for small businesses by 48.6 billion yuan ($7.71 billion) in the first half of this year.

The short-term effect of such tax cuts for businesses is obvious, but it will be limited if the potential of Chinese consumers is not realized as soon as possible.