Unnecessary speculation about taxation change

Oct 26,2016

A recent State Council document suggested that the income tax for high income earners will be adjusted while the tax for medium- and low-income residents will be reduced. This would be a welcome move and genuine effort to promote social equality when implemented.

But unnecessary misinterpretation of the document by some online media outlets gave rise to concern among people whose annual income is more than 120,000 yuan ($17,700).

The worries that emerged were linked to the fact that those whose annual income is more than 120,000 yuan are required to declare their income to the tax authorities at the end of each year, and many netizens and online media outlets were quick to speculate that this could be a reference, even a threshold, for defining who would be considered a high earner.

To still consider 120,000 yuan as the baseline for high income earners is a far cry from reality. It has been 10 years since that requirement was introduced in 2006, and a much higher percentage of the population now earns more than that each year while paying more to cover living costs.

It has become clear that people were being too hasty in their conviction that 120,000 yuan would be the threshold for those considered high earners. Experts with both the Ministry of Finance and the General Administration of Taxation have confirmed that the figure has not been set as the baseline for defining those with a high income.

There is nothing wrong with the government adjusting its tax policies in line with the times. Indeed, such adjustments have become a must for social equality, due to the income gaps that have emerged and continue to widen.

But the concern and anxiety displayed by many residents, as well as the critical comments made by some online outlets, could have been avoided if the departments under the State Council had clarified the related issues with detailed information in time.

These related departments should clearly define what they consider to be a high income so that people know where they stand. However, such a decision will need to be based on appropriate investigation and research, which will no doubt take time. So people will have to be patient while they wait for more details to be released.

The strong public response should also serve as a reminder for policymaking government departments to better express themselves as their words and moves would arouse the interest of the general public.

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