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People's Daily Online>>China Society

Reforms to target income tax system

By Zhao Yinan (China Daily)

09:17, December 12, 2011

HAIKOU - Fundamental reforms of China's personal income tax system are expected to be put into place in three years, a senior expert said.

The reforms are likely to introduce a tax system based not only on a person's annual income but also on economic burdens or expenses in families.

The current personal income tax system, by contrast, sets a nationwide threshold and does not take individual economic expenses into account, the expert said.

Jin Dongsheng, deputy director of the semi-official tax institute under the State Administration of Taxation, said the existing system is "far from the goal of income redistribution" and needs to be revised to be fairer.

"Two people can shoulder immensely different burdens even though both of them receive similar payments every month," Jin said.

"Those who have to support the aged and the young in the family should not be taxed the same as bachelors."

Jin, who was speaking at a recent forum on income distribution at the China Institute for Reform and Development in Hainan province, said one possible solution to the problem would be to establish a system that refunds taxpayers according to their family burdens and expenditure.

China raised its personal income tax threshold to 3,500 yuan ($540) a month from 2,000 yuan in September, in a bid to boost domestic consumer demand and bridge income disparities.

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