Individual tax needs floating with CPI: political adviser

Political adviser Liu Huan suggested the individual income tax threshold should be adjusted dynamically according to the yearly Consumer Price Index (CPI).

Data issued by the State Statistics Bureau shows the CPI of January, 2014 rose by 2 percent from a year earlier. The CPI growth rate were even higher in the same month, in straight years before 2014, Liu Huan, the Counselor of the State Council and vice director of the School of Taxation of the Central University of Finance and Economics said, as the inflation grows, individual incomes is equal to shrink. But there was little essential progress in reforming the policy of the individual incomes tax since the lift of the tax threshold to 3,500 yuan ($563.61) in 2011.

In a bid to ease tax burden on individuals, He suggested the government link up the threshold of the individual incomes tax with CPI. The threshold is supposed to float annually in accordance with CPI after its data is published, which is more reasonable than an adjustment every several years.