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The threshold for monthly personal income tax is set to double to 1,600 yuan (US$198) a move experts hail as creating a more equitable society.
If, as expected, the amendment to the personal income tax law is approved by the current session of the Standing Committee of the 10th National People's Congress (NPC), Chinese earning less than 1,600 yuan (US$198) a month will not pay any income tax.
"It will ease the burden on low- and middle-income people, mainly wage-earners such as migrant workers and employees at enterprises," said Han Baojiang, economics professor of the Central Party School of the Communist Party of China.
The central authorities have started to use taxation as a tool to achieve the goal of building a "harmonious society," said Han yesterday in an interview with China Daily.
This is only the first step, he said, more measures will follow, such as the adoption of an inheritance tax.
The new threshold was raised from 1,500 yuan (US$185) in a previous draft of the law revision after the country's top legislature held the first-ever public hearing in Beijing last month.
A total of 20 representatives from all walks of life put forward their proposals, with most agreeing that the cut-off point should be raised.
The move was widely hailed as a good example of heeding public opinion while formulating legislation.
In 1994, China began levying income tax on citizens earning more than 800 yuan (US$98) but only 1 per cent of people were earning more than that; now, about 60 per cent earn that much.
The increased threshold will not have a bearing on foreigners working in China as they pocket 4,000 yuan (US$495) tax-free each month.
But many foreign businessmen and enterprises are likely to be watching with interest as most of their employees are Chinese. In addition, procedures fortaxdeductionby companies at source would be greatly simplified.
If the amendment is adopted next week, the new policy may take effect next month.
(China Daily)
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Updated: 2005-10-24 10:20
