Draft tax law sets record for feedback

PUBLISHED : Wednesday, 01 June, 2011, 12:00am
UPDATED : Wednesday, 01 June, 2011, 12:00am


The draft amendment to the personal income tax law has made history by attracting a record 230,000 items of feedback in a month-long online public consultation.

But a sharp divide remains between officials and the rest of society as to how much the mainland's existing law should be revised.

Economists have warned that citizens who submitted feedback may be disappointed in the outcome because the government might not grant as many concessions on the threshold for taxable income as they hope, the Xinmin Evening News, of Shanghai, reported.

The previous record-holder for the most feedback was the Labour Contract Law of 2006, which drew more than 190,000 comments.

According to mainland reports, the majority of online comments regarding the new tax law were requests to lift the threshold for taxable monthly income from the present 2,000 yuan (HK$2,400) to more than the government-proposed 3,000 yuan. But there are signs this may be asking too much.

During the public consultation period, from April 25 to May 25, the National People's Congress also invited selected experts and public representatives for talks. In those meetings, many said the 3,000 yuan threshold was appropriate.

In the official People's Daily, Liu Zuo, chief of a think-tank associated with the State Administration of Taxation, wrote that the government-proposed threshold was benchmarked against urban wage-earners' average expenditures for the present and the years to come. In another piece, Liu urged Beijing not to yield to the sway of 'unprofessional and irrational opinions' on tax reform.

Xinhua reported that, with the public consultation period over, the draft amendment may be submitted to the NPC Standing Committee for a second review late this month.

It remains to be seen how much influence the feedback would have on the legislative debate, but Chen Qinggui, a columnist on Rednet, a Hunan -based portal, said ignoring those opinions would jeopardise the government's credibility and arouse greater social discontent.

Other critics say the draft amendment should consider the cost of living in different regions and that taxes should be collected from families rather than individual workers.

Finance Minister Xie Xuren said the amendment would reduce the government's annual tax takings by 120 billion yuan.

Earlier, the sharpest criticism of the existing income tax law was made by Li Daokui, a professor of economics at Tsinghua University and a member of the People's Bank of China's advisory board. Li published an article early last month saying that the present personal income tax law was unable to help the mainland tax the wealthiest people who make their money mostly from asset-based transactions rather than fixed salaries.