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Raise income tax threshold

(China Daily)
Updated: 2011-01-11 07:59

Some Chinese media outlets say that despite increasing calls for raising the 2,000 yuan ($301) threshold for personal income tax, the reform is unlikely to bring about any adjustment. But a change can benefit ordinary wage earners, says an article in Oriental Morning Post. Excerpts:

Some experts oppose raising the threshold of income tax and instead suggest adjusting tax rates and the nine-grade progressive rating system.

They say that since 70 percent of the taxpayers earn a monthly salary of less than 2,000 yuan, lifting the income threshold will not benefit them. Instead, it would benefit the wealthy and thus aggravate wealth disparity.

But it is questionable whether 70 percent of the salaried people earn less than 2,000 yuan a month. Even those who have a monthly income of just more than 2,000 yuan a month can barely cover all their expenses. This is especially true for people living in big cities.

Indeed, raising the threshold of the income tax means higher tax deduction for the high-income group. The truth is that a tax deduction may mean a drop in the bucket for the rich, but even a moderate deduction can mean a lot to the middle- and low-income groups.

China's fiscal revenue in 2010 is expected to cross 8 trillion yuan ($1.2 trillion). That is enough reason for the government to increase the threshold of personal income tax for the benefit of the middle- and low-income group.