AGAINST

Hua Sheng

President of Beijing Yanjing Overseas Chinese University

Some people believe that raising the individual income tax threshold can better help distribute national income and lessen the burden on low income taxpayers. But facts point to something else. According to statistics released by China's Ministry of Finance, about 72 percent of Chinese people's income is below 2,000 yuan ($308). Therefore, the reform will not benefit the majority of people, but only relieve the burdens of the middle-class and have minor influence on the wealthy, resulting in widening the income gap. Taking Beijing for example, as the current taxation threshold excludes deductions for insurance and pension, only people who have a net income of about 2,700 ($415) should pay personal income tax, which is suitable to China's current reality.

To narrow down the income gap, the government should first manage to increase the income of low-income earners. It is inappropriate to only give financial assistance to middle-class regardless of the majority.

Gao Peiyong

Expert on finance

I don't think raising the personal income tax threshold will stimulate consumption or boost domestic demand. The personal income tax amount only takes up a small proportion of earnings of medium income earners, who are the main contributors of such tax. It means the effect of relieving taxpayers' burden is minor.  

As the income gap isn't shown in people's salary, but is obvious in other incomes like that from property, it is unrealistic to narrow the gap by increasing the tax threshold. Studies show that the proportion of taxpayers will decrease 5 percent if the threshold increases by 100 yuan ($15). So, if the standard continues to be raised, say to 8,000 yuan ($1,232) even 10,000 yuan ($1,540), there will be a big drop in the number of taxpayers. In this sense, some experts worry that people's awareness of paying tax will be weakened as their personal tax decreases, which will further lead to make people lose the awareness of supervising how the tax they contribute is used.

Tian Qiusheng

Professor on economics

Although raising the standard of personal income tax will relieve the burden on wage earners to some extent, I don't think it is the right time to do so. The reasons are as follows:

First, it will not boost domestic demand. Currently, the incomes of more than a half of the total wage earners haven't reached the current threshold, which means it will not increase the disposable income of those with low income. As those with medium and high income have already developed a relatively high level of consumption trends, personal income tax doesn't matter too much for them.

Second, raising the threshold will result in larger social unfairness. Under the circumstances of income disparity, a uniform and undifferentiated personal income tax system will worsen the disparity, because the raised threshold will make those with high income get more disposable income than the ones with low and medium income.