Chinese debate raising income tax threshold exemption

Chinese citizens around the country have been debating a proposal to raise the threshold for individual income tax exemption to 3,000 yuan per month.

The NPC Standing Committee, China’s top legislature, on Wednesday publicized suggestions and opinions on amending the Law on Individual Income Tax that were submitted online from April 25 to May 31.

Currently, individuals earning under 2,000 yuan ($307.7) per month do not have to pay income tax. However, a draft amendment to the law proposes to raise the threshold to 3,000 yuan per month.

Among all 82,707 citizens who commented on the proposal, 15 percent of them favored raising the exemption to 3,000 yuan.

However, 48 percent suggested to further raise the exemption to 5,000 yuan per month.

A college student from Jiangsu Province said that 3,000 yuan was too low for people living in big cities such as Beijing, Shanghai and Guangzhou where many young people’s monthly home mortgage payments were higher than 3,000 yuan.

Many people proposed that there should be different exemption thresholds in line with the local individual income level.

Provinces, autonomous regions and municipalities should be authorized to have choices, for instance, 3,000 yuan for those in the west, 4,000 for the middle area and 5,000 for the east, a person from Guangdong Province wrote.

Prof. Zhu Daqi with Law School of Renmin University of China said to establish a comprehensive and categorized individual income tax system will give consideration to people of different income levels, which is in line with the objective of tax system reform during the 12th Five-Year Plan period (2011-2015).

In addition to raising the individual income tax exemption threshold, many people proposed that the government should consider more methods for citizens to apply for tax reduction and reimbursement in raising families, education and medical treatment.

The top legislature started to collect public proposals and opinions to the amendment of the individual income tax law in April, hoping to gain useful ideas for lawmakers to determine the final version of the amendment.

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