Editorials

Taxing problem

(China Daily)
Updated: 2010-05-21 07:52

The steady increase in the number of tax paying elite is good news for retailers who seek to profit from the country's consumption boom. It is also a prism through which China's widening income gap can be viewed.

According to tax authorities, the number of well-to-do taxpayers earning more than 120,000 yuan annually increased last year.

They say 2.69 million people earned an average of nearly 350,000 yuan ($51,200) annually in 2009. They paid 138 billion yuan in individual income tax, accounting for 35.5 percent of the country's total personal income tax receipts.

Yet, compared to the per capita net income of farmers, at 5,153 yuan, and the disposable income of urban residents, at 17,175 yuan, the wealthy taxpayers' list only goes to show the worsening level of income disparity in the nation.

Taxmen have been quick to point out that progressive individual income tax measures have helped narrow the huge wealth gap.

This is partly true given the tiny percentage of rich taxpayers out of the large proportion of individual taxpayers.

What is missing in that argument, however, is a reference to the broad picture of wealth distribution in this country.

While personal incomes are climbing at single-digit rates, the country's tax revenues have rocketed by 33.2 percent year on year in the first four months. Industrial enterprises' profits have almost doubled in the first quarter.

Clearly, the overall share of taxable personal income in the national economy has kept shrinking even as corporate profits are soaring, enriching their owners.

It is unclear if this "super-rich" class is included in the 2.69-million high income-tax paying category. If not, a reform of the tax system is clearly long overdue.

(China Daily 05/21/2010 page8)