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China increases income tax threshold

07-01-2011 14:05 BJT

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Anticipation has been building about possible changes to China's income tax law, and now the Top Legislature has adopted the amendments.

Analysts say Thursday's adjustments translate into lower taxes for the country's residents. Experts add that the alterations will not only better regulate income distribution, but also help boost consumption.

The Standing Committee of China's National People's Congress had lifted China's individual income tax exemption threshold to 3,500 yuan, about 540 US dollars, effective September 1st.

The legislature lifted the threshold 500 yuan higher than the original proposal, after public outcry over the amount, and rising living expenses.

As the country's inflation accelerates, and residents' share in overall national income shrinks, China's urban workers have been calling for tax cuts.

Zhu Qing, executive director of Chinese Finance Society, said, "The adjustment this time is big enough that it will greatly help medium-and-low income earners, by boosting their disposable income. Meanwhile, it also likely to increase the country's consumption."

China's income tax revenues ballooned in the last decade, to over 483 billion yuan in 2010, from about 41 billion in 1999. And more than 60 percent of the government's total tax revenue came from income tax.

In May 2011, income tax revenue amounted to over 50 billion yuan, up nearly 34 percent from a year earlier.

China's current individual income tax threshold stands at 2,000 yuan.

 

Editor:Liu Fang |Source: CNTV.CN

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