China should think carefully about raising the minimum level of
taxable incomes for wage earners, a taxation official said on
Thursday.
The official, who asked not to be named, said the actual minimum
level was much higher than the government-set 800 yuan per month
when one considered other benefits such as pensions, unemployment,
medical insurance and housing allowances.
Official statistics show that wage earners pay about 40 percent of
China's total personal income tax, making it the government's
largest source of personal income tax revenue.
The
State Administration of Taxation (SAT) official said this ratio
was in conformity with the state of economic development, income
distribution and tax administration in China.
He
said the average nominal rate of personal income tax in the country
was among those in the upper-middle level in the world. He said
actual tax rates were lower because of poor management in tax
collection.
The number of wage earners paying taxes jumped from 9.6 million in
1994 to 60 million in 2000. In such cities as Shanghai, Beijing,
Shenzhen and Xiamen, wage earners paid more than 60 percent of
local personal income taxes.
The official said since China charged different rates of tax on
different individual incomes, people with equal earnings may pay
different amount of taxes. He said the inequality of the current
personal income tax system was an obvious flaw.
According to a study by the Chinese Academy of Social Sciences,wage
earners have to pay higher tax rates than rich people because they
do not have the means to spread the tax burden. Rich people are
able to pay lower rates of tax on incomes from sources other than
wages or salaries.
He
said China would reform the current tax system to better tax the
rich. The country would also change the system of deducting tax
from pay rolls.
(Xinhua News
Agency August 23, 2002)