Highlights of China's income distribution reform plan

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China's State Council on Tuesday unveiled guidelines to reform the country's income distribution mechanisms, a long-awaited move amid growing public concern over a widening wealth gap.

The reform will focus on how to increase residents' income, narrow the income distribution disparity and regulate the distribution order, said a statement from the State Council.

Following are the highlights of the plan:

STATE FIRMS

-- The percentage of profits that central state-owned enterprises (SOEs) have to hand in to the government will be increased by around 5 percentage points by 2015 from the current level and part of the added income will go to social security.

-- SOEs must impose ceilings on payments to their senior management who are appointed by the state and make sure senior staff's salary growth is slower than the average level for general employees.

-- Authorities will strictly control both the total amount of salaries and the average salary level at SOEs in sectors with excessively high income to gradually narrow the income gap between different sectors.

-- Proceeds from the use of public resources such as state-owned land, sea, forests, minerals and water must be shared by the public and most of the profits should go to public services.

GOVERNMENT EMPLOYEES, OFFICIALS

-- The staff scale of central and local governments will not be increased and the number of leadership positions will be reduced in the 2011-2015 period.

-- Government spending on receptions, car purchases and use as well as officials' overseas tours will be rigorously controlled.

-- Rules demanding government officials report their income, real estate assets, investment and family members' jobs will be implemented more strictly.

-- Grass-roots civil servants' salaries will be raised properly and those working in poorly developed and remote regions will have higher allowances.

TAXATION

-- The government will gradually expand experimental property taxes and strengthen taxation on second-hand property transactions.

-- Consumption taxes will be imposed on some high-end entertainment activities and luxury products.

-- Studies will be conducted on introducing inheritance taxes at an appropriate time.

-- Foreign individuals will no longer be exempt from personal income taxes on stock dividends and bonuses they obtain from foreign-funded enterprises in China.

-- Structural tax reductions will be promoted to cut the tax burden on low- and middle-income earners and small enterprises.

FINANCIAL SECTOR

-- Regulation will be strengthened to demand more listed companies pay dividends to individual investors.

-- Reforms will be advanced to make banks' interest rates more market-oriented and loan and deposit interest rates will be allowed to move in a properly wider range so as to protect the interests of savers.

RURAL POOR

-- The government targets reducing the number of people living below the poverty line of 2,300 yuan (366 U.S. dollars) in per capita annual net income at constant 2010 prices by around 80 million as of 2015.

-- Farmers will be guaranteed proceeds from transferring their contracted land plots and will collect higher revenues from gains in the land value.

-- Rural migrant workers will be helped to register as urban residents and benefit from all basic public services in cities.

-- The government will try to make farming more profitable by industrializing agricultural production and continuing to increase the minimum purchase prices of major grain products.

-- About 2.4 million poor residents in rural areas with harsh living conditions will be resettled in the 2011-2015 period.

-- A long-term mechanism to increase farmers' income will be established.

SOCIAL SAFETY NET

-- The government will expand the proportion of expenditure on social security and employment promotion in the total fiscal outlays by about 2 percentage points by 2015 from 2011.