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UPDATED: March 25, 2013 NO.13 MARCH 28, 2013
Should China Levy an Inheritance Tax?


According to research by Beijing Normal University on wealth distribution, China should levy an inheritance tax when at least 5 million yuan ($800,000) is passed down.

The result of a survey done by China Youth Daily on whether the country should start collecting the tax shows that 48.46 percent of the 11,203 people surveyed opposed the idea while 34.04 were in favor. The remaining 17.51 percent remained neutral on the subject.

In an interview, Zhang Xiaojie, head of the State Administration of Taxation, said, three problems need to be solved. First, society needs consensus on the collection of the tax; second, there should be a timetable for the procedure; third, various other problems need to be dealt with.

The topic has aroused a heated debate. The following are excerpts of opinions:


Liao Xiaojun (Guangzhou Daily): It is still too early to collect inheritance tax in China. It would do more harm than good to the economy.

Assets of most local private entrepreneurs are used as business operation capital. According to common practice in other countries, such capital is exempted from inheritance tax or enjoys a preferential rate.

Most private business people, still in the prime of their lives, would take many years to leave their assets to their heirs. Such a tax would affect economic growth and lead to the outflow of capital.

Moreover, inheritance tax is regarded internationally as complex. It is even harder to implement in China while the personal asset declaration and registration system remains incomplete.

Feng Haining (China Youth Daily): Obviously, the issue needs to be decided by the National People's Congress through legal procedures while taxation authorities connect with banks as well as housing organizations.

Moreover, before levying estate tax, we should take into consideration general tax levels in China. If the purpose is to increase the country's tax revenues, inheritance tax would be hard to accept.

Double taxation is already common in China, with high indirect tax, about which taxpayers are complaining. Therefore, if inheritance tax is to be levied, it is necessary for the Central Government to first reform the current taxation system and lower the overall tax burden of the people. Otherwise, it is improper to add any new taxation items. Also, due to cultural differences, it's relatively easier to collect inheritance tax in other countries compared to China, where parents want to leave their assets to their children.

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