Individual income tax decline, deeper tax reform urged

The country's individual income tax revenue declined year-on-year in the first two months of this year, while overall fiscal revenue recorded a double-digit growth in the same period, data from the Ministry of Finance showed.

Analysts suggested that further reforms in the tax system are needed to lower the tax burdens of individuals and enterprises and raise taxes on companies causing serious pollution.

The country's total fiscal revenue grew 13.1 percent year-on-year to 2.09 trillion yuan ($330 billion) in January-February, the Ministry of Finance said yesterday.

The government's total tax income rose by 9.5 percent year-on-year to 1.85 trillion yuan in the first two months, while revenue from individual income tax declined by 3.9 percent to 140.9 billion yuan.

The decline in the individual income tax revenue was caused by the "hike in the threshold for individual income tax," Zhu Weiqun, a professor of the School of Public Economics and Administration at Shanghai University of Finance and Economics, told the Global Times yesterday.

China raised the exemption threshold for individual monthly income tax from 2,000 yuan to 3,500 yuan from September. The former nine-bracket tax structure was also changed to seven and the minimum tax rate was reduced from 5 to 3 percent. Following the change, an additional 12 million salary earners became exempt from income tax, taking the total to 60 million.

Despite the easing of the tax burden on individuals, experts called for further improvements in the tax collection system. "Some high-income people could evade taxes easily because of administrative lapses," Zhu said.

Zheng Xinye, a professor at the School of Economics at the Renmin University of China, told the Global Times that the central government should reduce the taxes levied on companies that cause less pollution and could levy resource tax and windfall tax, in a bid to modify the country's tax collection structure.

Zheng also suggested reducing value-added tax rates for ordinary products like foodstuffs and edible oil.