China to Levy Tax on Savings Interest 　　Chinese lawmakers adopted amendments to the Law on Personal Income Tax by 121 votes in Beijing on August 30, deleting the phrase "interest from savings deposits" from items listed for tax exemption. 　　However, one member of the Standing Committee of the National People's Congress (NPC), China's top legislature, voted against the amendments and another 10 abstained. 　　The NPC Standing Committee agreed that the time for beginning to levy tax on bank savings deposits and measures for levying the tax will be decided by the State Council later. 　　According to Xiang Huaicheng, minister of Finance, this new source of state revenue will be used to increase subsidies and allowances for workers laid off by state-owned enterprises, boost the minimum income of urban dwellers, and replenish long-delayed pensions for the retired. 　　He said that the tax will cover deposits in both the yuan and foreign currencies in Chinese banks. 　　Xiang said the levying of the savings interest will be favorable for stimulating the consumer sector and narrowing the gaps between the rich and the poor. 　　It is reported that since the 1970s, the volume of the national savings deposits has been ranking top in the world. 　　Between 1989 and 1997, national savings deposits accounted for over 35 percent of China's gross national product. 　　As for the gap between the rich and the poor, legislative sources said, the savings deposits of high-income households accounts for half of the total while that of the middle and low- income households combined accounts for the remaining half. However, the latter accounts for 90 percent of the country's depositors. 　　During the review of the amendments, quite a few legislators pointed out that the levy of the tax on savings deposits should give certain consideration to low-income residents. 　　They suggested introducing the practice of a progressive tax on savings deposits, in an effort to practically narrow the gap between the rich and the poor. 　　The NPC Standing Committee recommended that the State Council adopt the "positive views and suggestions" of the members of the Standing Committee in drafting measures for implementing the amended law. 　　According to a sample survey made in Beijing, Tianjin and Shanghai, 53.7 percent of the interviewees expressed their support for the levy of savings deposits tax. 　　The savings deposit interest rate for a one-year term has dropped from 9.16 percent in 1996 to today's 2.25 percent. 　　Beijing residents are expected to accept the new tax as another cut in bank interests. Economicnews 1999-09-03 Page2 Full Story in Chinese