Government and Policy

Income tax amendment draws heavy responses

(Xinhua)
Updated: 2011-05-09 20:29

BEIJING -- China's top legislature has collected a record 200,000 feedback items just two weeks after requesting public input on a draft amendment to increase the minimum threshold for personal income tax from 2,000 yuan (US$306) per month to 3,000 yuan.

The Standing Committee of the National People's Congress (NPC) published the draft amendment to the Personal Income Tax (PIT) Law on its official website, www.npc.gov.cn, on April 25, calling for public submissions. The deadline for submissions is May 31.

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The amount of online feedback has already exceeded the more than 190,000 items received when the top legislature publicized the draft Labor Contract Law in 2006 to hear public opinion for a month, according to the NPC Standing Committee.

During a bimonthly session which concluded late last month, the NPC Standing Committee examined the draft amendment to the PIT law for the first time.

The draft amendment, featuring a minimum tax threshold hike, is among China's latest efforts to improve the living standards of the country's middle- and low-income earners and to achieve a more fair income distribution.

China currently uses a nine-bracket progressive rating system, which applies a minimum tax rate of 5 percent to those who earn between 2,000 to 2,500 yuan, and a maximum rate of 45 percent for those whose earnings exceed 102,000 yuan a month.

But, according to the draft, the minimum tax rate of 5 percent will be applied to those whose monthly salaries range from 3,000 yuan to 4,500 yuan and the peak rate to those who make more than 82,000 a month.

More than 200 million people of China's working class will stand to benefit from the lifting of the minimum PIT threshold. If the personal income tax threshold is lifted, only about 12 percent of the working class will have to pay taxes, down from the current 28 percent, according to officials.