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Wahaha chairman Zong Qinghou is calling for an increase in the income tax threshold. Photo: EPA

Cut taxes to boost the economy, urges China's second richest man Zong Qinghou

Wahaha chairman suggests country's 'huge contingent of public servants' needs to be thriftier to ease the burden on taxpayers

Kathy Gao

The mainland's second-richest man, Zong Qinghou, has urged the government to cut taxes and spending to boost economic growth, according to a financial news site.

"Many small- and medium-sized enterprises cannot survive without tax evasion, which has led to 20 per cent of businesses paying 90 per cent of the nation's taxes," Sina's financial news site quoted Zong telling a group of economists and entrepreneurs at the Yabuli China Entrepreneurs Summer Summit in Zhengzhou, Henan province, on Saturday.

He suggested that the monthly income tax threshold should be raised to 10,000 yuan (HK$12,600) to increase people's income. The existing income tax threshold is 3,500 yuan.

Zong, 68, chairman of leading beverage maker Hangzhou Wahaha Group, said the government had never considered how to reduce taxation so as to increase ordinary people's income, the report said.

If the nation is rich, but people are poor, the country cannot be strong
Zong Qinghou, Wahaha chairman

The businessman, who is worth US$11.2 billion, according to the latest China Rich List, said the government "didn't spend" tax income on improving people's livelihood, and, instead, too much of it was "wasted".

He said that 51 per cent of the national revenue was spent on running the government, according to the report.

Zong thought that the country had "a huge contingent of public servants" and the government "should be thriftier to lighten the burden on taxpayers".

He said he was optimistic about the mainland's economic outlook, saying he believed its rapid growth would continue for another 20 years.

"[But] we still have a lot to do," Zong said.

"For instance, we need to further develop things such as education, health care, culture and protection of the environment."

He warned that continued heavy taxation could cause instability within society.

"If the nation is rich, but people are poor, the country cannot be strong and society will be unstable," the report quoted Zong as saying.

He added that the government's expenditure on "maintaining stability" had "greatly exceeded" its revenues.

"If ordinary people's income were increased, [everybody] would live a happy life and society would be stable," he said. "There would be no need for [the government] to have to try to maintain stability."

He stressed the need for the government to carry out reforms on its administrative approval system for enterprises.

Zong said the burdens on businesses today were heavier than before, according to the report. His Wahaha Group faced paying more than 400 different government administrative charges each year, he was quoted as saying.

This article appeared in the South China Morning Post print edition as: Drinks tycoon calls for tax cuts
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