Cabinet adviser denies media reports amid heated debate over China's inheritance tax law

A cabinet adviser has denied claims he told media that a draft inheritance tax law would be discussed at an upcoming annual Communist Party convention amid heated public debate over its feasibility.

Liu Huan, a member of the Counsellors’ Office of the State Council, said he had not given any media interviews regarding the inheritance tax law in September, nor had he ever obtained any documents of the third plenary session of the 18th Central Committee of the Communist Party, according to a statement published on the Office’s official website on Tuesday.

“Certain media reports containing distorted and inaccurate information obtained from illegitimate channels have damaged my reputation, thus I reserve the right to take legal action,” read the statement attributed to Liu.

The statement was issued in response to a report published last week in the 21st Century Business Herald that has stirred discussion on whether China is ready to embrace its first inheritance tax.

Another indication that points to a possible introduction of the law was a State Council document issued in February that called on local officials to explore ways of levying an inheritance tax at an “appropriate time”.

Under the latest revised version of an early form of the law, the cut-off amount for the inheritance tax is 800,000 yuan (HK$1.01 million), and net successions of 5 million, 10 million, and 30 million yuan will be taxed at 840,000 yuan, 2.09 million yuan, and 10.34 million yuan respectively, according to government calculations.

Supporters applauded the proposed tax as an instrument to reduce the widening wealth gap and to encourage social mobility. But many critics complained it would exert more pressure on a population already burdened by numerous taxes. Others said the threshold was set too low to benefit the general public.