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Tax reforms on the cards for China

Taxation was hot topic during this year’s National People’s Congress and the Chinese People’s Political Consultative Conference.

Levying tax on a household’s disposable income rather than an individual’s net income was the key issue.

Now the reform is on the way, reported Ji’nan Daily, as central government is planning a nationwide online taxation information system as the technical preparation for the reform.

Personal income tax is often called “the Robin Hood tax” Robin Hood stole from the rich to give the poor.

Under many countries’ income tax systems, people on higher salaries pay a higher tax rate on earning over a certain threshold.

This helps redistribute income so that economic inequality is reduced.

Last September, the personal income tax threshold was raised from 2,000 yuan to 3,500 yuan.

But as the prices of daily commodities keep rising, many people are finding the tax burden becoming heavy again.

Also, the family behind each taxpayers has different economic burdens, commented the Yangtse Evening Post. Levying income tax without considering the amount the taxpayer has to pay to support their parents and children is thus ”unfair.”

“It is necessary to immediately launch an income distribution reform plan,” said Chi Fulin, executive director if the China Institute for Reform and Development, based in Hainan.

“Otherwise, middle-income families will on longer be the backbone of society in 2030. This may have negative effects on all the efforts central government has made to ensure sustainable economic growth.”

Experts warn that we have a long way to go to realize the family-based income tax system.

“Currently the biggest obstacle lies in how to accurately calculate the income of family members who live and work in different places across the country,” commented the Yangtse Evening Post.

“The policy which requires those earning more than 120,000 yuan a year to file personal income tax statements is also part of preparations for the family based income taxation reform.”