Economists say proposed 3,000 yuan income tax threshold too low

10:56, May 26, 2011      

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Almost 70 percent of economists questioned in a survey say a proposal to increase the level of monthly tax-free earnings to 3,000 yuan ($460) is still too low.

The draft amendment to the Personal Income Tax Law, put forward by Chinese legislators, suggests increasing the minimum threshold at which income tax is applied to earnings from 2,000 to 3,000 yuan.

The proposal, which also reduces the number of income tax brackets from nine to seven, was posted on the National People's Congress's (NPC) official website on April 25 to solicit public opinion until May 31.

But 69 of 100 Chinese economists questioned by Netease said that the 3,000 yuan threshold was too low. They included Yao Jingyuan, a retired economist with the National Bureau of Statistics, and Chen Zhiwu, professor of finance with Yale University in the US.

While 55 economists believed that the minimum threshold should be raised to 5,000 yuan, 11 believed that 10,000 yuan was the right level. Meanwhile, 39 economists believed that the number of income tax brackets should be five instead of seven in the draft law.

Some 66 economists said the current draft does little to regulate income distribution.

And a majority of economists said personal income tax levels should reflect factors such as regional variation and incomes of earners' families.

The NPC website had received over 230,000 opinions by Tuesday, according to Shanghai Securities News.

Liu Shangxi, deputy director of the Finance Research Institute under the Ministry of Financek, told Xinhua that personal income tax could be linked to the consumer price index, a main gauge of inflation.

Source: Xinhua
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