China's Tax Reductions Save Billions for People

China's policy to ease the tax burden on wage earners and small businesses has saved them billions of yuan, the state media reported on December 23.

China raised the threshold at which individuals must pay income taxes from 2,000 yuan to 3,500 yuan on Sept. 1 in a bid to support domestic consumption and narrow the wealth gap.

The policy has saved citizens more than 60 billion yuan (9.5 billion U.S. dollars) since its implementation, according to the edition of the People's Daily on December 23.

In October, 30 million people declared taxes on wages and salaries, down by 60 million from the number before the implementation of a higher threshold for paying income taxes, the newspaper said, quoting an official with the State Administration of Taxation.

The government also lifted the value-added tax (VAT) threshold for small enterprises to between 5,000 yuan and 20,000 yuan in terms of monthly sales revenues, from the previous threshold of 2,000-5,000 yuan, in November.

Meanwhile, the threshold for levying business tax on small enterprises was raised to 5,000-20,000 yuan from the previous 1,000-5,000 yuan.

Those two measures are expected to generate tax reductions of 29 billion yuan a year, the newspaper said.

More than 9 million self-employed entrepreneurs, or 63 percent of the nation's total, saw their tax burden decrease by 40 percent on average after the VAT and business tax adjustments, it reported.

Yang Zhiyong, director of financial research office of Chinese Academy of Social Sciences, suggested adjusting taxes on personal service income and authors' remuneration next year to further relieve the tax burden, according to the newspaper.

Source: Xinhua