The adjustment in the income tax of individuals is good, although further improvement is needed, says an editorial in Beijing Youth Daily. The following is an excerpt:
The Standing Committee of the National People's Congress is studying an amendment to the law on individual income tax. If the amendment is approved, it will raise the country's monthly individual income tax levy threshold from 1,600 yuan (218) to 2,000 yuan.
Many migrant workers and urban residents have a monthly income of between 1,600 yuan and 2,000 yuan, so they would no longer have to pay tax.
However, this adjustment is only provisional considering the rapidly changing income levels and costs.
This year has seen dramatic price rises in many essential items. The consumer price index jumped by 6.9 percent in November year on year, a record high in 11 years.
It is therefore inevitable employers will raise current salaries, which may turn more people into individual income tax payers. Thus, the adjustment in the deductible amount will become less significant.
The government's income for 2007 is estimated to be more than 5.1 trillion yuan. The tax adjustment would only reduce the government's income by 30 billion yuan, which is marginal compared with its total income. The State can afford further tax cuts.
There are suggestions about reforming individual income tax by setting different deductible amounts and tax rates for different regions. There are also suggestions that income tax should be calculated according to the financial burden of the tax-payer or even families instead of individuals.
All these suggestions should be seriously considered by the authorities to improve our current tax scheme so that the interests of the public are protected.
(China Daily December 26, 2007)
