CRI听力:Draft Amendment to the PIT

On April 25th, the Standing Committee of the National People's Congress published the draft amendment to the Personal Income Tax Law, and asked for public opinions. The deadline is May 31st. More than 230 thousand comments have been collected in just one month; some of them are supportive, while some are strongly against.　

Liu Min brings you more.

Two changes in this amendment draft attract most people's attention and raise heated debate. One is the minimum threshold for increased personal income tax, from 2,000 yuan per month to 3,000 yuan. The other is that income tax brackets be cut from 9 to 7.

The amendment is hailed by many as a step forward in the country's tax reform as it tries to relieve the burden on middle and low income earners. But it is also strongly opposed by people who believe that a fair income distribution can not be achieved just by changing small details.

Li Daokui, dean of Center for China in the World Economy of Tsinghua University, is one of the opponents.

"China began to collect personal income taxes in 1980, and the target population is high salary workers in foreign companies. 30 years have past, but the tax system has only changed a little. The framework is the same."

Collecting personal income tax is an important measure when adjusting income distribution. Based on the current situations personal income tax is paid by　companies on behalf of employees and is based on wage levels. But other forms of income which should subject to payment according to the law, such as interest, bonuses, lease and transfer of property and part time incomes, are seldom collected. Some people even call personal income tax "wage tax" due to its narrow collection range. Most tax payers are wage earners, while there is loose supervision of high income people with multiple incomes.

Jia Kang, the head of the Finance Research Institute at the Ministry of Finance, agrees that the existing tax system fails to cover the range it should do.

"For example, a rich guy who owns a company. He has the right to decide how much salary he earns. He can write in the account that his wage is only 3000 yuan, therefore, he only has to pay about 100 yuan as income tax. What about his other forms of income which should be subject to tax? The adjustment of distribution fails with him."

Then how to solve the problem and make personal income tax function as "taking from the haves and giving to the have-nots"?

Some experts suggest that we should adopt a single rate tax system instead of the progressive rating system, as Russia and several western countries do. They say that a broad tax base and low tax rate would be good. But other experts oppose the idea, saying that our national conditions are different with those countries, thus we can not copy their tax format.

Making a tax system is a complicated and systemic project. A perfect solution can not be made by merely increasing the minimum threshold and reducing tax brackets.　

For CRI, I'm Liu Min.