The threshold of individual income tax will be raised by a small margin in the near future, but policy makers have said no major reform of individual income tax is imminent.
The threshold of individual income tax is likely to be raised from 2,000 yuan (US$293) to 2,400 (US$351) or 2,500 yuan (US$366), according to Liu Huan, deputy dean of the School of Taxation at the Central University of Finance and Economics (CUFE).
The State Administration of Taxation will develop a plan for reforming the individual income tax system this year, according to a department work schedule released on February 17.
A number of proposals on the threshold of the individual income tax are likely to be tabled at next month's parliamentary meeting – the 2nd plenary session of the 11th National People's Congress. Many experts have suggested the threshold be raised to 3,000 (US$439), 5,000 (US$731) or even 8,000 yuan (US$1,170). But a major hike in the threshold is unlikely, Liu told the National Business Daily.
A big jump in the threshold would put pressure on central government finances. It would also widen the income gap between residents of coastal cities and those in the interior, and raise questions about the fairness of the taxation system, said Liu.
Liu suggested cut in tax rates would benefit a larger proportion of wage earners. He also suggested government consumption coupons as alternative way to reduce tax.
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(China.org.cn by Yang Xi, February 20, 2009)