From Chinese Press

A suggestion on income tax

(China Daily)
Updated: 2011-03-04 09:17
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On Wednesday, the State Council passed a draft on raising the income tax threshold, which will help low- and middle-income people, says an article in Xinhua Daily Telegraph. Excerpts:

The most direct and effective way of reducing individual income tax is to raise its threshold. Other measures, such as adjusting tax rates, can only be used as a supplement.

Increasing the threshold will not only raise the income level of most wage earners and stimulate domestic demand, but also ensure macroeconomic control when inflation is quite severe.

But if the move is similar to the ones made earlier - imposing the same adjusted standard throughout the country with no flexibility - it would disappoint the public again.

A unified income tax threshold without regional differences does not suit prevailing national conditions. It cannot manifest the equality and fairness of taxation, either.

Therefore, it would be better to delegate power to local governments to fix the income tax threshold according to local conditions such as pay levels, consumer price index, social purchasing power, economic development and social security. The measures, however, should be implemented after being approved by State Administration of Taxation.

Respecting regional differences will help eliminate unfair taxation caused by differences in economic levels in different areas and increase the efficiency of institutional arrangement. It will help realize social equality, too.

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