Under the rising pressure of commodity prices, the central government is considering cutting taxes in some fields as a main fiscal policy for the next year, and the threshold for individual income tax is expected to rise, according to China Business News (CBN).
Current threshold for individual income tax in the country is 2,000 yuan ($300), amount that was implemented in 2008. Previously, during the National People's Congress (NPC), and Chinese People's Political Consultative Conference (CPPCC) sessions in 2009 and 2010, many members called for the threshold to be adjusted to 3,000 yuan ($450).
According to Yang Zhiyong, director at the Institute of Finance and Trade Economy of China Academy of Social Sciences (CASS), since the outburst of the financial crisis, many countries have raised their threshold and as commodity prices spiral up, raising the threshold is sure to help stimulate consumption, since people's incomes are enlarged.
Data from the Ministry of Finance (MOF) and State Administration of Taxation specified that under the current situation, a raise of 100 yuan ($15) on the threshold of the tax would lead to 5 percent less citizens paying taxes.
Yang also said that the current total of individual income taxes in the country amounts to over 400 billion yuan ($60.1 billion), and if the threshold was raised to 2,500 yuan ($375), an equivalent of less than a hundred billion would be discounted which the country can afford.
The report showed also that the taxation system in China differs from those of other countries. In China, about 65 percent of tax payers are the workers, while in Singapore, the top 20 percent rich contribute to 93 percent of the country's individual income taxes.
Xie Xuren, director of the MOF said previously in the article that the department will further reform the system during the unfolding of the 12th Five-Year Plan.