China said yesterday it would increase the minimum threshold for income tax as Beijing tries to boost domestic consumption and narrow the country’s widening wealth gap.
Shanghai also said it would raise its minimum wage by 14 percent as authorities try to ease the impact of high inflation on the poor, which has fueled fears of possible social unrest.
China’s current threshold for personal income tax is 2,000 yuan (US$304) per month. The country has nine income tax brackets and a maximum tax rate of 45 percent.
“In order to further reduce the tax burden on medium- and low-income people, it has become necessary to revise the personal income tax laws and increase the tax-paying threshold,” the State Council said in a statement.
Chinese Premier Wen Jiabao (溫家寶) said on Sunday “resolving unfair income distribution” would be a major objective of the 2011-2015 five-year plan.
The issue of fair income distribution “directly relates to social fairness and justice and the stability of the society,” Wen said in an online exchange with Internet users.
Shanghai’s minimum wage hike follows similar moves across the country as China’s government tries to relieve pressure on households struggling to keep up with rising food and property prices.
The minimum monthly wage will rise to 1,280 yuan from 1,120 yuan, the city said in a statement. It will take effect next month.
Inflation topped 5 percent in November for the first time in more than two years. The latest official data said January inflation was at 4.9 percent, above the full-year target of 4 percent.
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