Some people believe if the cutoff point of the individual income tax were raised to 8,000 yuan, this form of taxation would lose the function of regulating the income gap. Actually, the individual income tax is only a supplementary way of redistributing wealth. If the majority of low- and middle-income earners are exempted from the tax, the objective of establishing the tax is fulfilled.

China's taxation system focuses on indirect taxation. The public actually has paid taxes to local and central governments in the process of consumption. Before the system is transformed into one based on direct taxation, which is widely applied in Western countries, it's improper to impose individual income tax on the whole nation.

Reform the tax system

Ma Guangyuan (Oriental Morning Post): I would never oppose raising the individual income tax threshold, but we must see that the individual income tax only accounts for a small part of state tax revenues. Compared with expenditures on education, health, pension and housing, the individual income tax is not a major obstacle to the release of Chinese consumers' purchasing power.

To adjust the individual income tax is only one of the many ways to boost domestic demand, but we have no reason to exaggerate its significance and by no means should we put all our hope on the adjustment of the cutoff point of the tax. Lackluster consumption can be blamed on many factors: exorbitantly high housing prices and insufficient guarantees in the fields of health, education and pension.

Household-based consumption is common in China, so it's more reasonable to levy taxes on households instead of individuals. Since Chinese consumers have too much to pay on housing and other durables, the government should learn from the tax refund system practiced in some developed countries. A rational and fair taxation system is more helpful than to simply hike up the cutoff point of the individual income tax.

Mo Zhixu (The Beijing News): To raise the cutoff point of the individual income tax will do little to help low- and middle-income taxpayers. In China, individual income tax is only part of the tax burden, because the country has a tax-inclusive pricing system. That is, consumers have to pay tax for everything they buy or every service they enjoy. Therefore, as far as low-income earners are concerned, tax refunds are much needed. The tax they pay during consumption should be rebated.

For quite a long time, because the government was unable to effectively carry out taxation and the public was not very willing to pay tax, the government had to impose relatively high tax rates, so as to ensure enough tax revenues given the low taxation rate. In recent years, with the improvement of the tax collection efficiency, the real taxation rate has jumped from 50 percent in the 1990s to the current 70 percent. That's why we have seen rocketing tax revenues in recent years.

The key is to reduce the macro tax burden, which is more important than raising the tax threshold.

Wu Ruidong (Information Times): For years, economists, officials and ordinary people have paid too much attention to the cutoff point of the individual income tax, believing that, as long as it is raised regularly, it will be fair. I don't think the cutoff point is so important.

It's unfair to impose a uniform tax rate in every region of the country. People's incomes vary from region to region. In developed eastern regions like Beijing and Shanghai, the 2,000 yuan cutoff point might be a bit too low, while in underdeveloped western regions like Tibet or Guizhou, the 2,000 yuan cutoff point might be reasonable.

Therefore, it's better for the Central Government to empower local authorities to work out a suitable individual income tax cutoff point in accordance with local salary levels, consumer prices and social security benefits. Regions could submit their respective taxation schemes to the Central Government for approval.

I think such regionally distinctive individual income tax systems will help eradicate the uneven taxation burdens around China.

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