Tax policies need to be fair
(China Daily)
Updated: 2005-06-13 09:01

It is time to examine the tax system and lower the tax burden, says an article in the International Finance News, an excerpt follows:

The US magazine Forbes has released its "tax misery" index for 2005, in which the Chinese mainland ranked second among 52 countries and regions.

Some experts said such a ranking may not be true; they said the Chinese people do not pay really high taxes.

The method and data used by Forbes to come to its conclusion may be questionable. But the list serves to remind us that China does have heavy taxes for a developing country.

To maintain sustained economic growth, a rational ratio should be kept between the growth rate of taxes and the GDP. Economic experts think this ratio should be 1.0 to 1.2 in China.

However, the actual figure has been much bigger than the ideal level for the last decade. Since 1998, the average annual growth of taxes was 19.3 per cent while GDP growth was 8 to 9 per cent in the same period. Last year, the ratio was as high as 2.5.

When all fees collected from taxpayers are calculated, the actual tax level for the average Chinese person is much higher than citizens in developed countries.

To make things worse, high taxes are not fairly shared out among different social groups.

Domestic enterprises are levied higher tax rates than foreign ones, small and medium-sized businesses have a heavier burden than large ones and the rich are paying relatively less than the not so well-off.

The key to judge the efficiency of a country's tax system is whether it can stimulate the creativity of enterprises and the public. Therefore, the opinion of the public on the tax system must be considered.

Before we say the list released by Forbes would be wrong, we should examine our tax system, lower taxes and make them fair for all social groups.

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