With tax revenues expected to rise this year by a startling 30%, a meeting this week of China's top legislative body is considering a draft amendment to to the law on individual income tax which would raise the individual income tax threshold from RMB1,600 to RMB2,000.
Xiao Jie, State Administration of Taxation director, told a Beijing conference on taxation on Wednesday that China's tax revenues are expected to surpass RMB4.9 trillion (US$668.8bn) in 2007. He said that this was one of the highest year-on-year increases the country had ever known, and put it down to increased collection efficiency, as well as economic growth and a rapid increase in industrial enterprise profits.
Xiao said that the mix of revenues had show changes over the past few years, with income tax raising 26% of revenues in 2007, up from 22% in 2002. Stamp duty collections have also soared to RMB160bn due to rate increases aimed at dampening exuberant stock market trading. He predicted that tax revenues would continue to rise in 2008, despite a levelling down of corporate income tax rates to a unified 25% as from 2008. Existing preferential rates will be grandfathered, however, during an initial 5-year phase-in period. Raising the income tax threshold would reduce the tax take by RMB30bn.
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