Lawmakers exempt more taxes for China's middle class

10:58, June 27, 2011      

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China's top lawmakers have decided to reduce tax burdens of the middle-tier income earners by cutting the tax rates on monthly wages higher than 3,000 yuan but lower than 5,000 yuan.

Deliberating for the second time a draft law to amend the individual tax codes Monday in Beijing, more than 160 National People's Congress Standing Committee members have agreed to the vast majority of public opinion that calls for a reduction in low- and middle-income earners.

The lawmakers said that they stuck to the threshold of taxable wage at 3,000 yuan per month, despite the public's demand to raise it.

If the draft law is approved at the end of the bi-monthly NPC Standing Committee meeting, people earning less than 3,000 will be exempted from tax, and the middle-tier income earners pocketing less than 20,000 yuan a month will hand in less tax under the new codes.

However, those earning more than 20,000 yuan will have to face a heavier tax. The highest tax rate on the very top-tier, earning more than 80,000 yuan a month, stays at 45 percent.

The Ministry of Finance under the cabinet, the State Council, has estimated that the government will have 120 billion yuan less income because of the law revision. The measure is widely believed to instigate domestic demand as Beijing seeks more ways to grow the world's second largest economy.

By People's Daily Online
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