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Tax debate symptom of larger impatience

(Global Times)

09:14, September 02, 2011

The Ministry of Finance announced Wednesday that a person seeking to add the name of their partner on the deed of a property they own would no longer be taxed.

The announcement was greeted by many couples with a sense of relief. However, the public soon began questioning the randomness of government policy, rather than applauding the good news. Due to misinterpretation by the media, the public think the government has simply created a new type of tax that is being dropped after social pressure.

This is in accordance with China's current social mood toward taxation. Any policy or news concerning tax stirs up social criticism. Since on Thursday, a new personal income tax law has been practiced, knocking 60 million Chinese, whose monthly salaries are lower than 3,500 yuan ($548), off income tax rolls. But on microblogs, people use the slow pace of salary rises to poke fun at the policy. A recent popular greeting between college graduates is said to be: Hey, do you need to pay income tax?

The Forbes Magazine recently listed the Chinese mainland as second on its annual Tax Misery Index report. While the ranking does not necessarily indicate the real tax burden of the Chinese people, it is somehow in accordance with the social psychology toward tax. The Chinese people aspire to see quick reductions to their income tax burden.

Along with its economic rise, China now has a more solid basis to alleviate its macro tax burden. The government has been promoting tax reform and legislation. The general direction is clear – to boost structural tax reduction and principally benefit low-income earners.

Tax appears to be sensitive in any country. It can easily trigger conflicts between government and the public, swaying between demand for more welfare and opposition toward tax hikes. Such social psychology does deserve the attention of the government. The authorities need time to implement complicated tax reform, but they should first improve the way they work and obtain favorable public opinion.

Take the so-called mooncake tax for example. This is a concept hyped by the media, and in nature it is a form of personal income tax. Many are unfamiliar with it because their organizations used to dodge the tax in the flawed legal environment. The "mooncake tax" is seen as merely a new type of tax.

Similarly, the so-called adding-name tax is essentially a deed tax, which emerged with the new judicial explanation of the Marriage Act. The absence of a clear official explanation leaves the public an impression that the authorities simply create and drop tax policies at will.

Taxpayers' consciousness is closely related to the nation's economic growth and public life. The authorities should try to enhance this not only through reform policies, but also through modest and close communication with the public. This is the prerequisite for the Chinese people to build a consensus on tax and be patient during its gradual reform.

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