Personal Tax.doc

Personal Income Tax Revolution of China Public Finance Han Zhang A personal or individual income tax is levied on the total income of the individual. As an important tax of china, and also an important tool for regulating income distribution to narrow the gap between the rich and the poor, it did not play the desired effect. Nowadays, the personal income tax reform has become the focus of the society; the requirement of increasing personal income tax expense standard deduction keeps rising, the reform is urgently needed. The personal income Tax reform In the twenty-first meeting of the Eleventh National Peoples Congress Standing Committee in 2011, the government raises the personal income tax from 2,000(Yuan) to 3,500(Yuan), as a biggest tax cut action in the history. The biggest beneficiaries will be those at the bottom of the tax scale. The lowest rung of the income-tax ladder has been raised from 2,000 Yuan ($313) per month to 3,500 Yuan ($547). The average Chinese wage is around 3,000 RMB a month. As a developing country, China relies very little on hard-to-collect income tax for its revenue. Last year it raised only 6.6 percent of its taxes from personal income. Instead, the government goes after the business sector, which is easier to monitor. Chinas current tax system is a classified personal income tax system, it classify the different income of the taxpayer, and then separately taxed to obtain the total tax revenue. Such a tax system makes the wage earners of single income to pay more taxes, while the high-income group pay less by their diversify sources of income. The implementation of a same standard for all taxpayers, regardless of the severity of the taxpayers family burden, the amount of household spending, makes the low-income families experience a hard life. In some countries of which the tax system is more mature, in general, they run a combined personal income tax system. And take the family as a whole for tax has long been an intern