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Experts: income tax cut unlikely to boost consumption
(Xinhua)
Updated: 2008-12-14 21:30 To raise the income tax exemption bracket to anyone making 3,000 yuan ($438.4) a month, would not boost domestic demand and consumption.
They were responding to structural tax cuts proposed at an economic conference which ended here December 10. The proposal has been widely debated in the media. China's current threshold for paying income tax stands at 2,000 yuan a month. Gao said the proposed cut was targeted at a "specific kind of tax from a specific group of people for a specific purpose". He does not think it would stimulate consumption in an effective way. Ni said 60 percent of Chinese people have a monthly income of less than 3,000 yuan. The higher threshold would impact middle income families, however, the ratio of marginal propensity to consume(MPC) is low, he added. (For more biz stories, please visit Industries)
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