Chinese Lawmakers Discuss Tougher Tax Laws For Wealthy

by Mary Swire, Tax-News.com, Hong Kong

26 October 2005

Senior Chinese lawmakers have called for new legislation tightening the tax laws for high income individuals and private entrepreneurs.

Members of the Standing Committee of the National People's Congress, China's highest legislative body, expressed concern on Sunday that current laws are ineffective at ensuring that the wealthy pay an appropriate amount of tax on their incomes.

According to Leng Rong, a legislator on the NPC Standing Committee, new laws may need to be passed in the current session to raise public awareness of the taxation issue in China.

Other lawmakers, including Wang Xuewen and Feng Yi, a deputy of the NPC, called for the closure of loopholes which allow the cash deals which are so prevalent to slip through the tax net, and a new comprehensive tax reporting system which would cover all taxpayers and reduce the amount of unreported "grey income."

The NPC Standing Committee was meeting to discuss an increase in the threshold at which income tax becomes payable in China to alleviate the tax burden on low income workers and to reflect the country's rising incomes and growing levels of affluence.

Currently, Chinese workers pay income tax on a sliding scale starting off at 5% for those earning above 800 yuan (US$100) and rising to a maximum of 45% for those making more than 100,000 yuan a month.

A revised law to raise the income tax threshold from 800 to 1,600 yuan a month is expected to be approved by the Standing Committee this week.

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