The central government is considering sharing individual income tax with local governments from next year as part of tax reforms, according to economists quoted by the China Daily. The government has decided to put part of local income tax into the state vault because China's individual income tax has grown rapidly over the past several years, said Xia Jiechang, an economist with the Chinese Academy of Social Sciences. Figures from the State Administration of Taxation indicate that the amount of personal income tax collected in China soared from 7.27 billion yuan (about HK$6.8 billion) in 1994 to 51.1 billion yuan last year. During the first seven months of this year, individual income tax rose more than 50 per cent to 54.7 billion yuan. KPMG tax partner Peter Kung said personal income tax had risen sharply in China, thanks to growing affluence. Personal income tax now accounted for about 5 per cent of the country's total tax revenue, up sharply from about 1 per cent in 1995. The figure, however, is small compared with other nations. In Western countries, individual income tax is the largest single tax source of central governments and makes up 20 per cent to 25 per cent of the total central tax income, Mr Xia said. But in the short-term, the government will not make individual income tax a major central tax source because the average income level of Chinese residents is relatively low, he said. The central government is also required to consider the interests of local governments. It would share only a minor portion of the increased part of the income tax next year, based on the taxes collected this year, Mr Xia said. Zhang Peisen, a senior researcher with the Taxation Research Institute, said the detailed reform scheme on individual income tax has been submitted to the National People's Congress and is yet to be approved. He did not give further details, such as how much the threshold on individual income tax would be raised. The threshold should be about 1,500 yuan a month, said Hu Shaowei, an economist with the State Information Centre. The present threshold of 800 yuan a month was introduced in 1981, when the living standards of ordinary citizens were very low, he said.