The Ministry of Finance has proposed raising the minimum taxable
personal income from 800 yuan to 1,200 yuan a month, falling short
of expectations that it would be lifted to 1,500 yuan.
The ministry has sent the draft of its provisional personal
income tax reform plan to the State Council for approval. A source
at the ministry said that the 1,200 yuan figure had been selected
because the plan is a transitional one.
Beijing's Economic Observer quoted an?official
from the Ministry of Finance?as saying that the transitional
tax plan is not required to go through the legislative process in
the National
People's Congress.
The 800-yuan-a-month minimum taxable income has been intact
since 1981. It has been criticized nationwide for the toll it takes
on low-income families.
The ministry has postponed raising the minimum because personal
income tax accounts for a sizeable chunk of the state's
revenue.
The Ministry of Finance reports that the government levied 141.8
billion yuan (US$16.5 billion) in taxes on personal income in 2003,
accounting for 6.5 percent of China's total tax revenue. In the
first half of this year, the state pulled in another 88.1 billion
yuan, an increase of 20.6 percent from the same period last
year.
Yang Chongchun, deputy secretary-general of the China Taxation
Association, said that the rise in minimal taxable income is only a
subtle adjustment of the tax brackets that will not result in a
significant loss of revenue.
"It will ease the burden of low-income individuals as we will
tax more -- within a reasonable range -- in the high-income
brackets," explained Yang.
Because of geographical economic differences, the exact amount
of taxable income remains under discussion. "We have agreed to set
a standard that is subject to change according to provincial
conditions," said Professor An Tifu, of the Finance Department at
Renmin University of
China. "The fluctuation rate can be up to 20 percent."
(China Daily August 19, 2004)