A tax on mooncakes makes new levies hard to swallow

Last week's hottest topic appeared to be a spontaneous education campaign to raise taxpayers' awareness of their rights. It started when someone, apparently a regular wage earner, complained about the so-called mooncake tax - a tax on company handouts of the traditional delicacy to staff ahead of the Mid-Autumn Festival, which this year falls on September 12.

Then a lot of fuel was added to the debate as the tax authorities flip-flopped over whether to collect a tax when adding a spouse's name to home ownership papers. As of September 1, at least, the word from the Ministry of Finance and the State Administration of Taxation was that no such tax was to be levied.

These events also coincided with the introduction of a higher tax-free threshold for personal income from the start of this month. It has been raised from 2,000 yuan (HK$2,440) a month to 3,500 yuan, as approved by the National People's Congress Standing Committee in late July.

Actually, the three events are not all bad news. It goes without question that the last item, which officials claimed would exempt as many as 60 million wage-earners from paying personal income tax, should be exceedingly good news.

The second item is also not a bad deal for taxpayers, despite the contradictory messages given by local tax officials.

As for the first item, if mooncakes are considered to be part of bonus programmes, in theory the government has every right to demand a tax on them.

Interestingly enough, though, not many people sang the government's praises. But why? A commentary on the website of the official Xinhua news agency said it was because people nowadays tend to 'feel much more strongly about their identity as taxpayers'.

The more economic activities are subject to tax levies, the more this raises people's consciousness of themselves as taxpayers. It has become predictable that every tax-related event will arouse 'public misgivings' about the legitimacy of the levy, Xinhua reported.

The cause of such a rapid rise in society's sensitivity to taxation could be explained by the dissatisfaction with the still low tax-free threshold for personal incomes, the commentary said.

Also, taxing mooncakes, which are supposed to be shared in family reunions, conflicted with Chinese cultural values, making people feel 'like they had a fish bone in their throats', it said.

This, in part, explains why the mooncake, a taxable item by law, could become the focus of last week's controversy. It was being used to draw a contrast with the conspicuous lifestyles of the rich and officials' unashamed spending of public funds by officials.

A commentary in the Guangzhou-based Southern Metropolis News said: 'As we look around, we can see so many grand and constantly revamping government buildings, and so much official travel, cars and banquets on public funds. But ordinary citizens are made to pay a tax on even a festival food and an organised one-day tour. Let me ask you: Would the mooncakes still taste good?'

A commentary in the Dazhong Daily, a newspaper based in Shandong province, said: 'Of course, citizens in a modern society have 10,000 reasons to comply with the tax laws. But the tax administrations also have 10,000 reasons to deliver a good service to the taxpayers. Taxing society just for the sake of collecting tax, and trying to do so on every possible occasion and in every possible way is unreasonable and emotionally destructive at the same time.'

It is also interesting to note that even when they do not run their own commentaries, some official media print opinions from individual bloggers.

The Economic Information Journal featured a blog round-up which quoted a posting on Wang Taichuan's blog that said some international surveys had found the tax burden on mainlanders, relative to their production, was among the heaviest in the world, and that most citizens still do not know where to discuss taxpayers' rights.

Wang pointed to the imbalance between the ever expanding budgets of government officials for travel, cars, and banquets paid by public funds on the one hand, and the continuous decrease in consumer spending's share of gross domestic product on the other, arguing that it was easy to understand the public's lack of sympathy with the government on all tax-related issues.