Currently China’s Gini Coefficient is around 0.39, a warning signal of enlarging income gap according to international standards. Therefore the tax department will strengthen tax collections from high-income earners in an effort to balance income distribution of the society.

The Gini Coefficient is an indicator of income inequality reflecting the distribution of income throughout the population. If income is distributed equally across the population, the coefficient is equal to 0, and if a few individuals predominantly hold the wealth, the coefficient is closer to 1.

Following are major problems in China’s income distribution system according to officials of the State Administration of Taxation.

First, primary distribution is not in good order. For many people their extra income even exceeded that on the printed pay-sheet.

The second is the apparently enlarging income gaps between urban and rural areas, and between different regions, industries and individuals.

The third is all kinds of income obtained through corrupt and illegal means and ways, including tax fraud, smuggling, making and selling fake goods, illegal business, bribery, embezzlement and so on. On the other hand the low-income group is looming large as more workers get laid off and more people unemployed. What’s more, peasants’ income is also increasing slowly.

Tax departments at all levels should focus on collecting work on high income earners and wipe off all local rules and regulations that run against the state unified tax policy.

As reported, special files will be made for high income industries and individuals for a strengthened supervision. The income reporting system will also be improved and studies made on regulating the income distribution via personal income tax.

( 08/23/2001)