Reform must usher in best income tax system

One of the significant goals of the tax system reform is to establish an individual income tax mechanism that combines the classified and comprehensive taxation systems. At present, the classified individual income tax system levies 11 kinds of taxes based on different calculation methods.

Classified individual income tax is easy to manage but has many disadvantages. For example, people earning the same amount of money may pay different amounts in taxes. But under the comprehensive taxation system, tax can be collected according to a unified plan, which to a large extent can solve the problem of unfair taxation.

The current individual income tax threshold is 3,500 yuan ($509) per month, which cannot be adjusted for standard deduction. And comprehensive taxation system should have an inherent dynamic adjustment mechanism for standard deduction, which allows standard deduction to be adjusted according to the changing national basic living expenditure.