While the rich get richer, authorities are left with the taxing
issue of how to get them to pay their dues.
The top 100 taxpayers in south China's booming Guangdong Province turned in individual income
taxes of 229 million yuan (US$28 million) in 2005, just 1.1 percent
of the total amount, according to a report by the provincial tax
bureau.
All people earning over 1,600 yuan (US$200) per month must pay
income tax, with the base rate 5 percent. People earning over
100,000 yuan (US$12,500) per month pay 45 percent. The report
covered the whole province with the exception of Shenzhen Special
Economic Zone.
Rao Songde, a director of the bureau, said that while the
government has made efforts to monitor payments by the wealthy,
many are still trying to wriggle out of it.
"Those who pay the most individual income tax are by no means
the richest people in the province," he said.
Of the top 100 individual income tax payers in 2005, only nine
were corporate chairpersons or board members of the thousands of
profitable enterprises in the Pearl River Delta.
Yang Weihua, a professor with Sun Yat-sen University's tax and
financing research centre, said that it is easy for rich people to
avoid paying tax.
"Loopholes in the nation's tax laws have made it easy for
high-income people to pay minimal tax," Yang said.
He mentioned exemptions on real estate tax and inheritance as
examples.
"Frequent use of cash and the far-from-perfect credit system in
China have made it equally easy for high-income people to evade
taxation," he said.
Yang added that insufficient awareness of tax payment among big
earners is also a reason for non-payment.
Well-off people in the province showed differing attitudes to
the issue.
Cheng Haiping, partner of a law firm in Guangzhou, said that it
is necessary to pay taxes as required.
"As a law practitioner, I have no excuse for not abiding by tax
laws. Taxes are very important for the development of our
nation."
However, Cheng complained that the present individual income tax
rate is too high, saying it has bitten heavily into his monthly
income. He did not disclose the exact figure.
A board member of a Guangzhou real estate company, who spoke on
condition of anonymity, said that the rich would be more willing to
pay taxes if the government did not abuse public revenues and made
greater efforts to improve social welfare.
"Even if I paid my taxes generously, would the government help
my kid finish expensive higher education or pay for my medical
bills if I went bankrupt one day?"
Fortunately for the provincial coffers, not everyone held this
point of view.
According to the taxation bureau's report, two persons paid more
than 10 million yuan (US$1.25 million) each in income tax last
year.
(China Daily July 6, 2006)