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Taxation System Key to Curb Evasion
Officials from the State Administration of Taxation reportedly unveiled plans to establish a credit rating system for taxpayers during the weekend.

According to the scheme, taxpayers with good records will be put under the category A, which will entitle them to tax advantages and conveniences. Those that fall under category C will be subject to warnings and punishments.

Such measures will inevitably give a boost to public's awareness of paying taxes and somewhat reverse the current rampant tax evasion practice.

At present, statistics from relevant taxation departments showed that the tax evasion rate stood at more than 50 per cent in China.

Yet greater incentives for taxpayers to fully comply with tax liabilities must come from the bureau's stated intention to share credit information with other social organizations in the future.

As China further embraces the market economy, credit will gradually become the lifeline for not only businesses, but individuals.

Also announced is that in the near future, the presumption that the taxpayer is innocent will be included in a new tax service system.

This means taxing departments must prove that the taxpayer is guilty, rather than the taxpayer having to prove that he is innocent.

Such presumptions will provide administrative convenience to taxpayers and discipline taxation departments to prevent arbitrary practices or abuses.

However, the real factor responsible for unbridled tax evasions should be the current ineffective taxation system which allows many to easily escape without penalty.

Only the perfection of the current taxation system, coupled with strict enforcement of due punishment, will make taxpayers comply with the law.

(China Daily July 2, 2002)

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