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BIZCHINA / Review & Analysis
Time to introduce rebates for tax groups
(China Daily)
Updated: 2007-09-05 10:35
The Ministry of Finance?revealed that the country's financial revenue in
the first half of the year exceeded 2.6 trillion yuan (US$325 billion),
equivalent to the annual revenue of 2004 and a 30 percent increase over
the corresponding period last year.
Low and middle-income earners are bearing the heavy tax burden.
In this context, it is right that these two groups get back some of the
money they have paid in taxes, in the opinion of this author.
It seems that the State's moneybag is getting bigger and at an
accelerated pace. Putting a brake on this rapid financial revenue growth,
therefore, becomes imperative.
Tax rebates for low and middle-income people would help to achieve that
goal. And tax rebates of this kind are relatively easy to implement.
Besides, it also brings a number of benefits.
First, tax rebates help regulate social wealth distribution which is
leaning increasingly in favor of the rich.
Over the years, income disequilibrium in the country has been widening
and the society is becoming increasingly polarized.
Middle-income earners are the backbone of the tax system, yet they find
themselves trailing farther behind the rich in so far as disposable
income is concerned.
Giving back some of the taxes they have paid to the State treasury will
immediately increase their disposable income substantially, and will be
in line with the State's goal of regulating social wealth distribution.
Over the last decade or so, general socio-economic development has been
marked by the fact that the government has been receiving much more
benefits from the rapid economic growth than ordinary people.
Tax rebates to low and middle-income earners means a few thousand yuan
each for them, but would hardly dent the State's coffers.
Second, tax rebates can help resolve some of the chronic problems
besetting the Chinese economy.
Weak consumption demand, for instance, has for years been an inhibitive
factor in the promotion of economic development. As a result, heavy
reliance on investments and exports became a means to promote economic
growth. This is, however, not the right formula for the economy's healthy
and sustainable development.
The tax rebates, followed by the introduction of regular tax reductions,
and exemptions would largely promote the consumption power of low and
middle-income earners. This, in turn, would help resolve the structural
problems of the Chinese economy.
Third, the tax rebates would help make the society more harmonious.
Currently, inflation is on the rise with food price hikes and prohibitive
house prices.
Low and middle-income groups are finding the going is getting tough. This
is in contrast to swelling of the State treasury and rapid economic
growth. This situation by no means helps to build a society in harmony.
But tax rebates can play a role in this regard, helping to cushion the
negative impact of inflation and, in turn, facilitating the building of a
harmonious society.
Fourth, tax rebates help improve relations between the government and
people.
In essence, the relationship between the government and people is one of
inter-dependence. People pay taxes so that the country can carry on. When
the country is in difficulties, the people have an obligation to pay more
taxes to help. But when the State's coffers are swelling and the people
are finding the going tough, the government is obligated to let the
people pay less tax. At this time, rebates will best demonstrate the
government's care for taxpayers. This facilitates political stability of
the country.
(For more biz stories, please visit Industry Updates)
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