CRI听力:China's Tax Debate Provoked From the 'Mooncake Tax'

Although the mooncake tax has been discussed during the past two years, few people know that the tax should be imposed as the festival nears. Here are some office workers' reactions when asked if they pay taxes on mooncake gifts from their companies.

"What? We need to pay tax on mooncakes? I didn't know that."

"I think it would be better to receive some practical gift like cash. It would be much better than receiving gifts like mooncakes."

Tax authorities in big cities like Shanghai, Beijing and Nanjing recently reminded employers that the price of mooncakes, a traditional treat during the Mid-Autumn Festival, should be included as part of the monthly income of employees when calculating the amount of tax they should pay. Not only gifts like mooncakes, but all kinds of allowances should be included as personal income and taxed accordingly. They emphasize that companies that fail to include mooncakes as part of taxable income could be fined up to three times the amount of the tax.

But many people believe mooncakes should be different from other allowances. They say mooncakes are a traditional symbol of gratitude and encouragement to employees in China and should not be taxable.

Shi Shusi, a commentator, is one of them.

"This is really another negative signal to ordinary Chinese citizens. I think the tax authorities are overreacting on this kind of issue by emphasizing levying tax at this time of the year. For most office workers, such gifts are lame."

The Chinese society have been discussing other tax measures such as a recent regulation to be introduced in Nanjing that would levy taxes for adding a spouse's name to a home ownership certificate.

Many people worry that the Chinese government is putting too much taxation pressure on ordinary citizens as the country develops a normalized tax system.

By the end of 2008, 65 percent of the country's personal income tax was imposed on middle and low-income people, while only 30 percent of tax revenue came from high income citizens.

By contrast, the 20 percent of Singapore's population who are considered wealthy pay up to 93 percent tax on personal income.

But Professor Cheng Ligeng from the China Youth University for Political Sciences insists that it's quite normal to tax on company allowances including gifts like mooncakes.

"Tax payments are a citizen's duty. The companies, after all, are providing some allowances to their employees, as a show of gratitude to the staff. How can employees feel hurt just because they need to pay some tax?"

This April, the branch offices of some state-owned companies were found to have spent millions of yuan on expensive gift for employees. Sinopec's office in Guangzhou spent several millions of yuan on pricey bottles of liquor, including Maotai, for senior managers. Similarly, the Anhui branch of the State Grid Corporation of China reportedly purchased private cars for some top executives as a company benefit.

All of these expenses evaded taxes in the name of allowances. Figures from some research institutes show that China has lost 680 billion yuan annually on all kinds of taxes in recent years. The country's tax losses on grey income each year amount to 80 billion yuan.

For CRI, I'm Liu Min.