"Regulating grey income" sparks debate in China

09:13, March 11, 2010      

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Regulating the "grey income", a new term that appeared in the government work report delivered by Premier Wen Jiabao last week to the National People's Congress (NPC), has sparked heated debate among lawmakers.

"We must outlaw illicit incomes and regulate grey incomes to gradually develop an open and transparent income distribution system", Wen said.

The term "grey income" was coined in China after the country ushered in the reform and opening-up policy in 1978. It describes gains above official earnings ranging from the payment a professor receives for giving a lecture outside the college to gifts a teacher is given by parents who ask for more attention for their children.

It is labeled "grey" because it falls into no taxable category under the current law, triggering wide skepticism among the public.

"I am confused, as grey incomes should be banned rather than being regulated," said NPC deputy Wang Yangjuan, echoed by deputy Huang Lanxiang who argued it was difficult to define grey income.

However, Wen's mention of "regulating" the undefined income has won understanding and welcome among other deputies. Some of them noted that the misreading could have been avoided if the term was accompanied by a note.

"Only when grey income is clarified can the legal portion of it be taxed and the illegal portion eradicated," said Li Xinyan, vice head of the Fujian Provincial Federation of Industry and Commerce.

"Regulating grey incomes is not equal to admitting its legitimacy," said another deputy, Cai Fang, also head of the Institute of Population and Labor Economics at the China Academy of Social Sciences.

By regulating it, it is possible to clarify the "grey' area and identify it as either "black" or "white" (illegal or legal), he said.

This comes as part of the government's efforts to redistribute national income with the aim to improve people's livelihoods and promoting social harmony, Cai said.


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