By Deng Yuwen (China Daily)
Updated: 2007-12-04 14:42

Considering the current price rises, the public would see their lifestyles affected should their salary growth be lower than the consumer price index (CPI). If they are asked to pay tax on their securities investments, which is supposed to be a supplement to their salaries, it would be against the government's goal of boosting the public interests through the collection of taxes to further promote public service.

The CPI rose by 6.5 percent year-on-year in August, dipped to 6.2 percent in September and rebounded to 6.5 percent in October. During the same period, the income of the low-income groups rose only by 5 percent. Even if their income grows faster than the CPI this year, they would still feel the pressure due to increased expenditure on education, medical care, and the enhanced inflation expectation.

It is also the time to reduce taxes collected from businesses. The businesses are faced with a 17 percent value-added tax and 33 percent business income tax, both of which are much higher than the average in other countries.

Most small and middle-sized enterprises (SMEs), especially the private ones, are facing fierce market competition. Their profits are much lower than that achieved by the State-owned enterprises holding monopoly positions in the market. But these SMEs offer a considerable number of jobs. The influence to the society would be huge if these SMEs could not maintain their businesses because of heavy taxes.

It is now a high time to reform the current taxation scheme, both to boost social fairness and improve the lifestyle of the people. The government has seen a double-digit growth in its income for several years and it is now financially possible for the State to collect less taxes.

Deduction in individual and business income taxes is now the most convenient choice if an all-round taxation reform needs more time to be initiated. And if that deduction is not possible either, the bottom line should be not to impose new taxes that might affect the common people or the development of businesses.

The author works with the Study Times

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