‘High income’ definition causes debate

Finance and taxation experts have refuted rumors that individuals whose annual income is more than 120,000 yuan ($17,720) are in the “high-income group” and will be levied higher tax.

The rebuttal came after the rumors provoked heated public discussion.

A document recently issued by the State Council promoted increased income and reduced tax burdens for low and middle-income earners, as well as increased taxes for high-income earners.

However, the term “high-income group” mentioned in the document was said to be interpreted by the media as meaning “individuals whose annual income is more than 120,000yuan”, because it is the income standard used for the tax self-declaration system, according to current individual tax laws and regulations.

Although the Individual Income Tax Law and documents published by the Ministry of Finance and State Administration of Taxation use the term “high-income group”, there is no official definition of the so-called group.

Xinhua News Agency said on itsWeibo account on Monday that several finance and taxation experts who work closely with the government organizations said that having an annual income of 120,000 yuan is not the boundary that definesthehigh-incomegroup. Tax self-declaration of individuals whose annual income is more than 120,000 yuan was implemented in 2006, so it is “not anything new”, it added.

Moreover, “imposing higher taxes on the high-income group”, which has been supported by the public, was first mentioned by theMinistry of Finance in 2010 as a principle of individual tax reform for the 12th Five-Year Plan period (2011-15).

“I think the media misunderstood this issue,” said Zhang Lianqi, a financial expert who works closely with the Ministry of Finance. “The media stating that an annual income of more than 120,000 yuan is the definition of the term ‘high-income group’ is mere speculation.”

“It will take time for the individual tax reform plan to be introduced,” he added.

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