Others News
- Time to introduce rebates for tax groups
Date: 5-Sep-2007 Sources: (Xinhua Online)
BEIJING, Sept. 5 -- The Finance Ministry revealed that the country's financial revenue in the first half of the year exceeded 2.6 trillion yuan (325 billion U.S. dollars), equivalent to the annual revenue of 2004 and a 30 per cent 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.
Fifth, tax rebates are of positive significance for a clean and honest government.
It is necessary for the government to help poverty-stricken people and regions, and regulate wealth distribution through taxes. But this inevitably leads to the problem of 'big government'.
The more extensively and forcefully the poverty-aid program is implemented, the more government agencies and organizations are required. This only serves to bloat the government and, in turn, increases the opportunities for corruption and red tape.
However, tax rebates can simultaneously help regulate wealth distribution and make the government stay lean and clean.
It is common practice in the systems of developed countries that taxes are rebated, reduced or exempted according to the particular situation of the taxpayer. And it signals the direction in which China's future taxation-system reform should go, in the opinion of this author.
It takes time to institute a perfectly working tax reduction and exemption system. But it is pretty simple for tax rebates to be exercised - paying back the due sum of money according to the tax paying record, or stop levying tax on a person according to the tax-rebate sum he or she should enjoy.
It is high time for the tax levying departments to work out rebate plans and have them implemented.
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