Evidence shows that China will enter an era of "wage increase
and tax reduction", says a signed article in the Beijing
News. The following is an excerpt.
The Shanghai municipal government said recently that it would
directly tackle the relatively low wages paid to workers in
Shanghai. Before that, Guangdong Province also said clearly that
the government would force enterprises to raise wages through the
legislation of wage laws starting from next year.
As two key posts of China's economic growth, Guangdong and
Shanghai have adopted practices that have some exemplary meanings.
The building of a long-term system to raise wages should be deemed
as a crucial reform to effectively stimulate domestic needs, remedy
the imbalance of China's economic development and the national
income distribution, and boost the sustainable development of the
national economy.
In the past year of high-speed economic growth, government taxes
and enterprise profits both grew faster than the growth rate of
GDP, while the growth rate of workers' wages is lower than that of
GDP. We can probably say that the large growth of enterprise
profits and financial revenues come true at the expense of the low
wage owned by workers.
Undoubtedly, China's economy can't continue to grow in this
imbalanced condition. Wages of workers should rise simultaneously
with the national economy, which will usher in an era of "wage
increase and tax reduction". What Guangdong and Shanghai did is
just to answer the call of the central government, which said in
the report delivered by President Hu Jintao to the 17th National
Congress of the CPC that the government should "gradually raise the
proportion of residents' wages in the national income distribution
and raise the proportion of labor wages in the primary
distribution".
Tax reduction, if it is adopted, will play its role to
strengthen both enterprises and residents. The Law on Corporate
Income Tax and its related regulations will be enacted from the
first day of next year, which has drawn the curtain of the
nationwide tax reduction.
As this new law demanded, the corporate tax rate will be lowered
down from 33 percent to 25 percent. For those small-scale
enterprises, the tax rate is set at only 20 percent, and for
hi-tech companies it is only 15 percent.
As a result of all these tax reductions, as is estimated, the
national financial revenues may drop by 93 billion yuan in
2008.
As for wage increases, some people still worry that if the
government directly interferes in the setting of the workers'
wages, the enterprise itself will lose its autonomy. But in fact,
the government has various ways to interfere.
For example, it can indirectly increase the workers' wages by
strictly implementing the Labor Law and the Labor Contract Law and
tightly controlling the overtime work in those enterprises. In
addition, the government also can do it by guaranteeing the rights
of labor unions.
(China Daily December 1, 2007)