How heavy are our tax burdens?

Starting Sept 1, 60 million people in China will no longer have to pay personal income tax.

The People's Congress raised the personal tax threshold from 2,000 yuan ($307) to 3,500 yuan ($538) on June 30.

The change means after taking out one's monthly social insurance and housing accumulation funds, a person can deduct another 3,500 yuan – rather than the previous 2,000 yuan – before paying personal income tax.

The change will reduce the government's revenue by 160 million yuan ($24.6 million) every year. But many have pointed out personal income tax only accounted for 6 percent of state revenue in 2010, suggesting the reduction would not significant affect the national budget.

How meaningful is this change to individuals? How heavy are their tax burdens? What are some of the problems with our personal income tax system?

Digest China Host Feng Xin invites two guests to join her in the studio. Edmund Yang is a partner specializing in personal tax services with PriceWaterhouseCoopers. He has been in the field for 16 years.

Jia Kang is the president of the Institute of Fiscal Science at the Chinese Ministry of Finance. He has been consulting the government on finance and tax policies for more than two decades.

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