Income tax reform can help boost demand

The individual income tax reform allowing special deductions for children's education, continuing self-education, treatment of serious diseases, housing mortgage interest, housing rent and support for senior citizens that came into effect on Jan 1 is a key step toward changing China's individual income tax system from classified to comprehensive tax collection.

The personal income tax reform means individuals will get special deductions for six types of expenditures. The deductions, of course, will also include an annual income of 60,000 yuan ($8,730.81), as well as basic pension insurance, basic medical insurance, unemployment insurance and housing provident fund.

The seventh revision of the personal income tax law in August added special deductions for the first time, which is a highlight of the individual income tax reform in this round. It will not only strengthen the comprehensive tax collection system but also help reduce taxpayers' economic burden, and thus encourage consumption and make income distribution fairer.