Mixed reaction to increasing the threshold for income tax

PUBLISHED : Saturday, 27 August, 2005, 12:00am
UPDATED : Saturday, 27 August, 2005, 12:00am

The National People's Congress Standing Committee has received mixed signals from provincial representatives on proposals to change the threshold for personal income tax.

The Standing Committee is debating two amendments to the Personal Income Tax Law, one of which would raise the taxable threshold from the current 800 yuan a month to 1,500 yuan.

Jie Hua, head of the Taxation Bureau in Zhanjiang , Guangdong, said a higher threshold of 2,000 yuan a month would be more appropriate for taxpayers in coastal provinces.

Mr Jie was one of the 24 provincial representatives invited by the Standing Committee to join the review. He is also a Guangdong representative to the NPC.

China Youth Daily said Standing Committee members agreed on the need to raise the taxable threshold, but were divided on the appropriate level to set.

One group - led by Standing Committee member Jia Zhijie - favoured raising the threshold to at least 1,600 to 1,800 yuan a month.

They argued that many middle-income earners - those earning about 2,000 yuan a month - would be caught in the tax net if the new threshold was set at 1,500 yuan.

Shi Guangsheng , another Standing Committee member and a former foreign trade minister, suggested anything less than 2,000 yuan would be too low and even 3,000 yuan should be considered.

However, a number of representatives from poorer provinces expressed concern that such a high threshold could have a serious impact on provincial finances.

Lai Mei , head of the education bureau in Qinzhou , Guangxi autonomous region , said local governments would have no choice but to further cut back on education budgets if income tax revenue was reduced.

He said Qinzhou had more than 30,000 teachers and about 20 per cent earned about 240 yuan a month.

'If the financial revenue for the local government is further reduced, I am afraid these teachers may not get their wages,' Mr Lai told the Standing Committee.

Standing Committee members, including Lu Ming and Cong Bin , said an 'across-the-board' threshold may not be suitable as incomes and living standards varied significantly across the mainland.

Meanwhile, Ren Zhenglong , another Standing Committee member, said although a higher taxable threshold would help low-income families, it would also deprive them of the opportunity to fulfil their 'civic duty as citizens'.

'This will deprive them the honour of being a taxpayer and is not conducive in promoting civic awareness among the people,' he said.

The Guangzhou Daily reported that the central government may hold public hearings to solicit opinions on the issue before making a decision.