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Govt mulls ways to narrow income gap

By Zhao Qian (Global Times)

10:18, February 07, 2013

China's newly released income distribution plan is an important step toward narrowing the country's wealth gap, but more specific rules and measures will be needed, analysts told the Global Times Wednesday.

The State Council, the country's cabinet, unveiled a notice late Tuesday covering 35 items including the general target of enlarging the number of middle-income residents.

"It is a solid step toward narrowing the income disparity," Zheng Xinye, a taxation professor at the School of Economics at Renmin University of China, told the Global Times Wednesday.

One of the key parts of the notice is a plan for reform of the taxation system, an area where there is plenty of room for improvement, Zheng said.

The government will develop its tax submission system, and taxpayers with high incomes will not only see taxes deducted from their salaries paid by their employers - they will also need to pay taxes directly to the taxation bureau if they receive income from other sources, according to the notice.

A similar regulation has been in place in China for two decades, but high-income residents have little motivation to pay taxes directly to the taxation bureau, "mainly due to a lack of strict punitive measures for violation of the regulation," Zheng noted.

The notice also said that property tax would be extended to cover more areas across the country.

Potential expansion of the pilot property tax programs to more areas has been a hot topic ever since Chongqing and Shanghai launched the program in 2011.

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