Lower income tax proposed for two-child families

China should lower income taxes for families with two children to boost the family planning mechanism, a lawmaker said during the ongoing annual session of China’s top legislature.

The high cost of raising children, such as housing, education and healthcare, has made Chinese couples reluctant to have a second child, said Wang Rongchuan, deputy to the 13th National People’s Congress (NPC) and director of the Institute of Advanced Manufacturing Technology of the Chinese Academy of Sciences, according to the NPC website.

Wang proposed reforming the current income tax collection system to reduce the tax burden on two-child families, considering the economic impact of the policy on ordinary families.

Wang said wages are the main source of income for most Chinese families, and adjusting taxes for two-child families could reduce expenses in raising children and improving fertility.

“This could be an effective way of helping create a good family planning mechanism, and this is also what the public supports,” Wang said.

Data released by the National Bureau of Statistics show there were 17.23 million births in 2017, the second year since China allowed couples to have a second child, a drop of 630,000 compared to the previous year. The 2017 birth rate was lower by 0.52 percent compared with that of 2016.

He Yafu, an independent demographer, hailed Wang’s proposal. He further suggested reducing the tax burden for couples who have three and more children, He told the Global Times.

This was not the first time that tax reduction for two-child families has been proposed in China. China is planning to reform its personal income tax regime to allow certain expenses to be deducted, and certain expenses made by two-child families were among those being considered for deduction, Finance Minister Xiao Jie said in 2017, the Xinhua News Agency reported.