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Growing Income Gap Alerted by Lawmakers, Advisors
China's top lawmakers and advisors called for paying greater attention to the increasingly expanding income gap between the rich and the poor in the country.
At the current sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) National Committee, they urged establishing a more rational wealth distribution system to prevent an income "polarization" for different people.
In his report on the outline of the new five-year plan (2001- 2005), Premier Zhu Rongji listed "slow growth in the income of rural people and part of urban residents" as one of the main problems existing in the present economic and social life in the country.
Jin Renqing, an NPC deputy and director of the State Administration of Taxation, said that social stability and, in particular, economic development will be affected, if the problem of the income gap is not resolved. "Consumption would not go up without a rational wealth distribution system," he stressed.
According to investigations, currently, the Gini Coefficient, an international index used to measure income distribution, in China stands at 0.458, greater than the international warning line of 0.4, meaning that the Chinese society has entered "a zone of income distribution inequity."
In China at present, income gaps exist between urban and rural areas, between different regions, and between different lines of business, according to Tao Wuxian, an NPC deputy from Sichuan Province, southwest China.
In Sichuan, a local employee earns an average of less than 6, 000 yuan a year, a worker in eastern coastal areas earns around 20, 000 yuan on average yearly.
Last year, the State Statistical Bureau conducted a survey among 40,000 urban families on their income, which shows that high- income residents, who make up 20 percent of the total, own 42.5 percent of the total wealth.
In recent years, the income gap between urban and rural families has been increasing as farmers' per-capita income has grown at a much slower pace, compared with that of urbanites.
In spite of the enlarging income gap, no one would like to return to the old days when all employees, regardless of their performance at their jobs, were paid more or less the same amount of money. At that time, the Chinese people had a low living standard with almost everything in short supply. Over the past two decades, per-capita income in cities has grown by 3.6 times, and that in rural areas 4.7 times.
Xiao Guxin, a member of the CPPCC National Committee, attributed the disparity in wealth distribution mainly to inadequate reform measures.
The government does not want to shun the issue. In the outline of the new five-year plan, the issues of increasing individuals' income, rationally readjusting wealth distribution, and improving the social security system are put on top agenda. The government is looking for ways to increase the income of both urbanites and villagers, especially low-income families.
The government plans to deal with the issue by taking a series of measures including standardizing social distribution order; strengthening supervision and administration over distribution in industries of a monopoly nature; reinforcing the function of taxation to readjust distribution among different groups of people; improving Law on Income Tax; introducing the inheritance tax; protecting legal income; checking on unreasonable income; readjusting exorbitantly high pay; and outlawing illegal gains.
Some NPC deputies proposed: increasing aid to poverty-stricken people in a direct way so as to meet their basic needs; further improving the existing system that ensures a basic living standard for city residents; trying every means to create job opportunities to help families that have been impoverished due to unemployment; and paying special attention to the interests of special groups who are vulnerable to financial problems.
"Egalitarianism and increasing income gap are both wealth distribution inequities," said Xiao Zhuoji, a well-known economist, who said the existence of income gap among social members is normal. Any readjustment of the wealth distribution system should aim at either resolving the problem of unfair distribution or abolishing egalitarianism.
At present, the main problem is the practice of egalitarianism within the existing economic framework. A balance between fairness and efficiency can only by reached through resolving these two problems, he noted.
The existing Law on Income Tax was promulgated in the early 1980s to impose taxes on salary, the main income source of the taxpayer, according to Jin. The government is considering levying the income tax in a new way in an effort to improve the income taxation system.
Under the new method, a taxpayer will be required to report his or her earnings other than the salary to the authorities, the director said. China plans to strengthen income tax collection, especially with regard to high-income groups, while employers will be given greater pressure to withhold tax for the government, he said.
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