Concern over higher income tax fuels debate

File photo shows a seal placed on several 100 yuan notes.[Photo/IC]

The debate on whether a person earning 120,000 yuan ($17,720) a year belongs to the high-income group seems to have abated after several financial and taxation experts close to the government said reports saying "individuals with incomes above 120,000 yuan will have to pay higher taxes" were the result of the media's misunderstanding of government rules. But that has failed to ease people's worries over higher taxes.

The well-intentioned government policy aimed at increasing people's incomes hasn't drawn enough attention. Instead, the public seems to be obsessed with one sentence in the document: higher taxes for the higher-income group.

The controversy may be the result of the media's misunderstanding, but there are some important social problems behind that misunderstanding. Direct taxes, especially those imposed on individuals, are a big public concern not only in China but also in other parts of the world, because they relate to people's vital interests.

The problem is, as the experts clarified to the media, there is no official definition for the "high-income group". The only point seems to be what the media highlighted: the system of self-declaration of "high incomes" that requires individuals earning more than 120,000 a year to declare their incomes to the taxation authorities.

Of course the media should not equate the term "high-income group" with the self-declaration system because government documents or laws don't say so. But the fact is people believe the "high-income group" earns huge amounts of money because it has been singled out by the taxation authorities as a key target of inspection.

That, to a large extent, has forced the public to debate whether an annual income of 120,000 yuan or more is really high in China today. Since the average annual salary of Beijing wage-earners last year was 85,038 yuan, people rightly assume an income of "120,000 yuan or more" is not high.