Income-tax threshold likely to double to 1,600 yuan
By Sun Shangwu (China Daily)
Updated: 2005-10-24 05:13
The threshold for monthly personal income tax is set to double to 1,600 yuan
(US$198) a move experts hail as creating a more equitable society.
If, as expected, the amendment to the personal income tax law is approved by
the current session of the Standing Committee of the 10th National People's
Congress (NPC), Chinese earning less than 1,600 yuan (US$198) a month will not
pay any income tax.
China looks set to
ease the tax burden on its low- and middle-income residents after holding
a landmark public consultation amid fears that a growing wealth gap could
hurt stability. [AFP/File]
"It will ease the burden on low- and middle-income people, mainly
wage-earners such as migrant workers and employees at enterprises," said Han
Baojiang, economics professor of the Central Party School of the Communist Party
The central authorities have started to use taxation as a tool to achieve the
goal of building a "harmonious society," said Han yesterday in an interview with
This is only the first step, he said, more measures will follow, such as the
adoption of an inheritance tax.
The new threshold was raised from 1,500 yuan (US$185) in a previous draft of
the law revision after the country's top legislature held the first-ever public
hearing in Beijing last month.
A total of 20 representatives from all walks of life put forward their
proposals, with most agreeing that the cut-off point should be raised.
The move was widely hailed as a good example of heeding public opinion while
In 1994, China began levying income tax on citizens earning more than 800
yuan (US$98) but only 1 per cent of people were earning more than that; now,
about 60 per cent earn that much.
The increased threshold will not have a bearing on foreigners working in
China as they pocket 4,000 yuan (US$495) tax-free each month.
But many foreign businessmen and enterprises are likely to be watching with
interest as most of their employees are Chinese. In addition, procedures for tax
deduction by companies at source would be greatly simplified.
If the amendment is adopted next week, the new policy may take effect next
He Yongjian, an official with the Legislative Affairs Commission under the
NPC Standing Committee, told Xinhua that the State could afford the raised
threshold; and efforts to collect tax from high-income groups would be
The State coffers may lose 20 billion yuan (US$2.5 billion) a year with the
implementation of the new policy, Shi Yaobin, head of the Taxation Department of
the Ministry of Finance, said earlier.
During the six-day session, which started on Saturday, the NPC Standing
Committee will also deliberate the draft law on the quality and safety of
agricultural products for the first time, and continue to examine amendments to
laws on corporations, securities and property.
The NPC Standing Committee has also decided to revise the audit law at the
session, which is expected to increase auditors' powers to find fraudulent
information and fight corruption.
Li Jinhua, chief of the National Audit Office, made explanations on the
amendments to lawmakers at the meeting.
According to the revised draft, high-ranking officials of government
departments, and State-owned enterprises will be subject to audit.
(China Daily 10/24/2005 page1)