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Personal income tax threshold rise imminent
Updated: 2005-03-10 10:10

China's top tax official said Wednesday it was necessary to raise the threshold of personal income tax because of increased urban workers' salary income and residents' expenditures.

The Ministry of Finance and the State Administration of Taxation had drafted a preliminary plan for the raise and would submit it to the State Council for deliberation, said Xie Xuren, director general of the administration at a press conference on the sidelines of the ongoing parliament annual session.

The State Council then would submit it to the national legislature for further deliberation and, once the bill was approved, the related clauses of the personal income tax law would be amended, said Xie.

According to China's tax law, Chinese citizens should pay personal income tax for their salary and 10 other kinds of incomes.

The monthly income exceeding the 800-yuan (US$97) mark has been taxed ever since the tax was introduced in 1980.

Some localities have adjusted the norms for taxation but a unified national adjustment remains unchanged.

The tax, which is meant to balance incomes at different levels, has drawn nationwide criticism in recent years, particularly in better developed regions. Lawmakers have repeatedly called for the threshold to be lifted.

Jiang Deming, an NPC deputy, said he had learned from tax authorities that 65 percent of the country's personal tax was paid by people earning common salaries. However, people with high incomes usually evaded a lot of tax in various ways including opening different bank accounts and preferring payment in cash, he said.

About 160,000 yuan in personal income tax was collected in 1980, while the figure was 99.6 billion yuan last year.

Beijing lifted the threshold to 1,200 yuan in 2003 but the national level has remained unchanged. The number was 1,700 yuan in Shenzhen.

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