Property tax urgently needed to bridge the widening gap between the haves and have-nots and improve social services

The State Council's planned increase of the individual income tax threshold from the current 2,000 yuan ($306) a month to 3,000 yuan symbolizes an important step toward narrowing the gap between the rich and the poor and resolving the country's income distribution disparity.

However, a property tax, a tax aimed at taxing people's accumulated wealth, is more desperately needed to reverse the country's wealth distribution momentum.

Imbalances in social wealth distribution have proven more serious than income distribution imbalances in the world's most populous nation.

By the end of 2009, the number of families with more than $1 million had reached 670,000, ranking the country third in the world for millionaires, only the United States and Japan had more. However, wealthy families in China only account for 0.2 percent of the country's total number of households, a proportion that is far lower than that in other countries. For instance, the proportion is 4.1 percent of households in the US and 8.4 percent in Switzerland.

A recent survey jointly conducted by China's Merchant Bank and Bain & Company, a global management consulting firm, indicates that in 2010, 500,000 Chinese people were able to make an investment of 100 million yuan or above, and they held combined investment-capable assets of 15 trillion yuan. The survey also shows that China's wealth flow to wealthy people is accelerating at an annual growth rate of 12.3 percent, twice the world's average.

Accelerating wealth distribution imbalances will cause more damage to society than disparities in personal income distribution. Not only will it further widen the wealth-accumulation gap between different groups in society it will also pass such wealth imbalances on to the next generation.

According to a survey conducted by the Boston Consulting Group, the number of people with personal property worth more than $1 million increased 14 percent globally in 2009. It increased 31 percent in China, the fourth highest growth rate in the world. The large volumes of financial assets owned by wealthy people in China will unavoidably widen the wealth gap between the rich and the poor.