China is unlikely to levy individual income tax on a family basis, but raising the tax threshold on salaries looks certain, 21st Century Business Herald reported Thursday.
Liu Kegu, member of the Chinese People's Political Consultative Conference (CPPCC), as well as certain National People's Congress members, proposed individual income tax should be levied on a family basis. He argued that just raising the tax threshold is not meaningful enough for easing the burden of tax on families, the report said.
However, Su Hainan, vice-president of the China Association for Labor Studies, told the newspaper that the household-based taxation system is not likely to be implemented in the short run due to a limitation on technology. But he admitted it would be a trend for the nation's income tax reform.
For levying individual income tax on a family basis, China has to build up a comprehensive information database. It will take three years to establish a thorough information system for individuals, Liu said.
But a rise in the income tax threshold is a clinched deal, the report said, citing sources from a government think tank.
The new policy may also reduce tax rate grades. Despite the zero bracket amounts, the rate for incomes below 5,000 yuan will be 5 percent, the report said. The current policy has three grades for incomes lower than 5,000 yuan, ranging from five to 15 percent.
In addition, the threshold for individual income tax will continue to be unified across the country, the report said.