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Home >> Business
UPDATED: 08:08, January 25, 2007
China to make better use of tax leverage to bridge wealth gap
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The Chinese government will reduce taxes for low-income groups and tighten controls on tax evasion by high earners to ensure fairness and social justice and to close the wealth gap, said State Administration of Taxation commissioner Xie Xuren on Wednesday.

Although the threshold for personal income tax was raised from 800 yuan to 1,600 yuan per month from Jan. 1 last year, revenue from personal income tax revenue climbed 17.1 percent year-on-year to hit a record 245.23 billion yuan last year.

The growth rate is 11.8 percentage points higher than the previous year.

Xie attributed the rapid growth to the rising incomes fueled by the booming national economy and tighter enforcement of collection rules.

He said the SAT would make full use of tax leverages to narrow the widening gap between the rich and poor and contribute more to China's social harmony and common prosperity.

Tax revenue from medium and low income earners grew by 8.4 percent last year while the collection from high income earners surged 33.9 percent.

Xie outlined the measures the SAT had taken in facilitating "fair taxation" last year, citing the regulation on taxing home sales.

Under the regulation, people who purchase expensive homes such as villas and townhouses and sell them more than five years after the purchase must pay tax on the income while those who buy affordable apartments are exempted.

The levy of consumption tax on luxury goods was another method of fair taxation.

China began to levy higher customs duties on luxury items brought by travelers or mailed to China from Jan. 1 this year, with the rate on golf clubs and expensive watches tripling to 30 percent and that on cosmetics jumping from 20 to 50 percent.

The move accorded with the levy of consumption tax on luxury goods such as luxury watches, golf clubs, yachts, and wooden floor panels since April last year.

"Taxation is a major revenue redistribution tool. One of our top priorities this year is to use tax policies to guide consumption, facilitate energy conservation and environmental protection and to uphold fairness and social justice," Xie said.

Source: Xinhua

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