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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.
"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 of China.
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 China Daily.
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 formulating legislation.
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 month.
(China Daily) | 
Updated: 2005-10-24 10:20
