Nobel laureate and US economist Joseph E. Stiglitz on Thursday
commended China's unified corporate income tax rate as a positive
move.
"China for a very long period of time has imposed a much lower
corporate tax rates on foreign firms than on their Chinese
counterparts. For me it makes no sense."
The visiting professor made the comments while addressing at the
inauguration ceremony of a graduate institute of economics and
finance in Beijing's prestigious Renmin University of China.
China's top legislature, the National People's Congress (NPC),
on Thursday started examining a draft law aimed to introduce a
unified income tax for domestic and foreign-funded enterprises at
its ongoing annual session.
"The tax burden has put domestic companies at an unfavorable
position," said Stiglitz.
In his speech titled "China's New Economic Growth Model", he
voiced concern about Chinese local governments rushing in to
encourage foreign investment, both to generate jobs and revenues
for themselves.
In 2006, foreign-funded enterprises paid US$795 billion in all
types of taxes, accounting for 21.12 percent of the total national
tax revenue.
An estimate based on a national survey of company income tax
sources shows the average tax burden on foreign-funded firms is 15
percent, compared with 25 percent for domestic companies.
The unified tax regime is likely to treat both domestic and
foreign enterprises with an equal 25 percent tax rate.
Stiglitz argued it was unnecessary for China to offer
preferential policies or tax breaks to attract foreign capital.
"With China's investment rate as high as it is, the issue today
is not so much the level of investment, but its allocation."
Stiglitz also called for a boost in domestic consumption and
technological innovation for sustainable economic development.
Having served as the economic adviser during the Clinton
administration and chief economist and senior vice president of the
World Bank, Stiglitz is now a professor at Columbia University in
New York and chair of Columbia University's Committee on Global
Thought.
(Xinhua News Agency March 9, 2007)