File photo shows a seal placed on several 100 renminbi notes. Individual income tax has become a hot topic at the annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference National Committee. [Photo/IC]

Individual income tax has become a hot topic at the annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference National Committee, with some saying that imposing income tax on families as composite units, rather than on individuals, could make the taxation system fairer.

The system of imposing income tax on individuals cannot be said to be fair. For example, the burden of income tax on a family in which only one spouse works is different from that in which both work. Under the existing tax system, the tax burden on one-working-spouse families is heavier.

Even on families in which husbands and wives both work, the impact of income tax could be different. Household expenditure, including expenses on the elderly and children, varies from family to family. Simply put, the tax burden on families with different family structures is different. So when it comes to imposing income tax, expenditure on certain necessities (for instance, livelihood expenses) should be deducted from the overall income of a family.

Moreover, China's individual income tax policy distinguishes between different kinds of incomes and collects different percentage of taxes on them. Two people earning the same amount of money but in different forms - for example, one gets salary and the other, labor remuneration - end up paying different amounts as income tax. Such discriminations can end if a consolidated income tax policy is adopted.

Indeed, collection of income tax is necessary for the government's fiscal revenue. But we should not ignore the impact of imposing taxes on people's incomes that they actually spend on livelihood needs.

The goal of China's income tax reform, therefore, should be to establish a consolidated income tax system. Under such a system, there will be a unified calculation method for all personal incomes after deducting the expenses on family members' livelihood.