Most high-income earners set to ignore tax deadline

PUBLISHED : Monday, 02 April, 2007, 12:00am
UPDATED : Monday, 02 April, 2007, 12:00am

Many play a wait-and-see game over revised law

The first year of the mainland's new taxation system is expected to be a failure, with the overwhelming majority of high-income earners not lodging returns despite the deadline falling today.

Under the revised individual income tax law, which came into effect last year, mainlanders and overseas nationals who have lived on the mainland for more than a year have to lodge personal income tax returns, including the declaration of offshore earnings, if their income is above 120,000 yuan a year.

Despite today's deadline, the State Administration of Taxation said that as of last week only 1.37 million people had filed returns, only 16 to 19 per cent of tax experts' estimates of 6 to 7 million high-income earners.

In total, the mainland had about 75 million registered taxpayers at the end of 2005. The administration has detailed information on only 20 million of those.

A barrage of media campaigns both informative and cautionary seem to have been ignored by most of the targeted group of taxpayers

An official told the People's Daily that part of the problem was insufficient work by local tax bureaus. Also, some taxpayers had not yet formed the habit of recording their income and did not have a clear idea of the exact figures involved.

Some play a wait-and-see game, some have the false impression that they do not need to file returns as long as they have already paid taxes and others blindly suppose that they will be invisible to authorities, according to the official.

Fan Tiankai, a project manager of an information technology company in Beijing, said he probably would not file a tax return. 'Firstly, it's such a hassle to get the precise figures for wages, bonuses, subsidies, bank interest, and so on,' Mr Fan said. 'Secondly, it's a problem to do the calculations as I'm not an accountant and I prefer not to involve my company accountant in dealing with my personal finances.

'Thirdly, I have never deliberately evaded taxes so even if I'm caught it wouldn't be a big deal just for not filing a report.'

Mr Fan said that some colleagues had received a letter from the taxation authorities containing a 'friendly reminder' to fulfil their obligation.

'I did not receive the reminder letter. This means that the bureau does not have my details,' he said.

Lu Ling, a joint-venture human resources manager, did receive the letter and has handed in her return as required.

Her property investment company is one of the several sectors falling under the tax authorities' focus of attention and she invited taxation officers to give a training lecture to their employees earlier this month. After that, the company filed the returns for qualified workers free, according to Ms Lu.

'It's good to improve our awareness of how to pay taxes correctly,' Ms Lu said. 'Anyway, we've fulfilled our obligations so that raises the question: what about our rights as taxpayers?'

It is a common scenario in Hong Kong movies that a citizen questioned by civil servants demands to be treated decently because of his status as a taxpayer, not to mention the old western slogan 'No taxation without representation'.

On the mainland, however, 'taxpayer' is not a word in common use.