Chinese Tax Official Urges Caution Over Possible Increase In Minimum Taxation Level

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

27 August 2002

A State Administration of Taxation official, speaking to the Chinese People's Daily last week, has said that the government should think carefully about raising the minimum level of taxable income for wage earners, arguing that the actual minimum level is much higher than the government-set 800 yuan per month when other benefits, such as pensions, unemployment, medical insurance and housing allowances are taken into account.

Despite Beijing's recent high-profile crack-down on tax evasion committed by the country's wealthiest citizens, there have been protests about the fact the China's average income earners are the government's largest single source of personal income tax revenue.

According to a recent study conducted by the Chinese Academy of Social Sciences, this is because rich taxpayers are able to spread their tax burden by receiving the majority of their earnings via lower taxed income streams.

However, the unnamed official told the People's Daily that this was in conformity with the state of economic development, income distribution, and tax administration in China.

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