CRI听力:The Revised Law of Personal Income Tax Has Taken Effect

Zhang Xiruo is an employee working for a financial company based in Beijing. Her monthly salary is five thousand yuan. Before September 1st, she needs to pay 160 yuan per month in personal income tax. But after the new personal income tax law takes effect, starting from September 1st, she only needs to turn in 10.5 yuan per month.

"I think the money saved from the tax reduction can be put towards my living expenses, like going to the supermarket. Now, I need around 200 to 300 yuan when I shop at the supermarket. So the new law can help me save some money."

The major groups of people who will benefit from the new law are middle and low income earners. The percentage of people paying personal income tax has reduced from 28 percent to lower than eight percent in total; down from 84 million to 24 million. In Beijing, about 2.3 million people stop paying personal income tax.

The threshold of 3500 yuan means that, following insurance and mutual fund deductions, the remainder of a person's monthly income, if lower than 3500, is not taxable. This ultimately means that those people who make less than 4545 yuan won't need to pay personal income tax. So, compared to the old tax law, which group will now be paying more? Financing Manager Chen Hu shares his calculations.

"Those who make less than 38,600 yuan per month need to pay a similar amount of tax as before. But those who earn above this level will need to pay more tax. 38,600 yuan is the cut-off point."

Some experts have pointed out that just because fewer people are now paying personal income tax, this doesn't necessarily mean that the national tax income will decrease. The increased income of ordinary citizens will more than likely be transferred to consumption, which generates new tax income for the government, which will benefit the development of society as a whole.

However, financial commentator Ye Tan believes that a fixed threshold will hardly result in low and middle income wage earners being better-off.

"I don't think a fixed threshold amount for personal income tax is appropriate. We need to take a look at the real consumption ability of the common citizens. I think the threshold should be changed from time to time in connection with the Consumer Price Index. Only in this way can the government protect the common citizen's ability to consume, and prevent any possible decline in consumption."

But other experts have also pointed out that society cannot pin all of its hope on personal income tax to solve the entire issue of 'fairness' in terms of the income distribution. Personal income tax is but one part of the tax reform, which is unable to achieve the goal of a fair system in just one step.

For CRI, I'm Liu Min.