Citizens hoping for higher income tax threshold

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The Chinese public is looking for a way out of the nation's personal income tax (PIT) burden, expressing hope for a higher personal income tax threshold after the State Council proposed a plan to adjust the PIT entry.

About 38 percent of the country's citizens say that they want the country's top legislature to amend laws to implement the PIT for people who earn a monthly salary of 5,000 yuan (about 761 U.S. dollars) or above, which exceeds the expected 3,000 yuan threshold, according to an online survey in China's most popular portal website

Another 30 percent of respondents want the PIT entry level to be above 5,000 yuan, while one-fifth of people ask for a PIT threshold of 4,000 yuan, according to the survey, which attracted more than 90,000 respondents as of Thursday afternoon.

The anticipated 3,000 yuan threshold level was supported by only 10 percent of survey respondents.

The Chinese public's discussions over the PIT adjustments heated up after the State Council, or China's Cabinet, approved a draft plan to raise the personal income tax threshold and submitted the proposed adjustments to the Standing Committee of the National People's Congress (NPC) for examination.

The proposed amendment to the PIT law included raising the PIT threshold and adjusting the tax rates, but the State Council did not disclose any specific number of revisions.

Li Ziming, who works as a cashier for a private company in Beijing, called the State Council's proposal "a good thing that needs to be done."

"I earn about 2,800 yuan a month now and I will have my two hands up to endorse the hike of the PIT threshold to 3,000 yuan," said Li, who graduated from college one year ago.

"Though the adjustments, if realized, could only save me 55 yuan (about 8.4 U.S. dollars) every month in my PIT payments, I care about the extra benefits because my salary is very low," he said.

Liu Huan, the deputy dean of the School of Taxation of Central University of Finance and Economics, said that the proposed PIT threshold hike is good news for ordinary people since the current 2,000-yuan PIT entry mark is already lower than the average living costs in big cities such as Shanghai and Beijing.

"Raising the PIT threshold will boost the purchasing power of low-income groups and subsidize the low and middle-income workers amid soaring prices," Liu said.

Under the current PIT law, Liu said that nearly half of China's 8.3 billion workers do not have to pay PIT, citing recent research from the Central University of Finance and Economics.

He estimated that the number of PIT taxpayers will drop by 10 percent for every 500-yuan hike in the threshold.

Chinese workers will have to wait for a while for the adjustments since the NPC did not include the draft amendment to the PIT law into its agenda for the upcoming annual session that opens on Saturday in Beijing.

According to the Ministry of Finance, China's revenue from PIT totaled 394.9 billion yuan in 2009, 63 percent of which came from wage earners. The ministry has yet to release the PIT revenue figure for 2010.

The Chinese government raised the PIT threshold from 1,600 yuan a month to 2,000 yuan in March 2008.

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