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Speculation was rife over the weekend that China would levy
heavier tax for the "high income group" whose annual wages
exceed 120,000 yuan ($17,722), after the state cabinet released
a document on income distribution reform, noting it would use
taxation to narrow the income gap between different groups.
"That is a misread, a pure rumor," unnamed experts from the
finance ministry and tax bureau were quoted as saying, stressing
that 120,000 yuan is not the standard used to define the high
income group, and that the document doesn't mean the government
will increase tax.
Xinhua said that tax payers with annual income of more than
120,000 yuan, which includes various sources such as salary,
stock dividends and rental returns, have been obliged to
voluntarily file and pay income tax since 2006, which is
"nothing new".
But those media reports have triggered a wave of criticism on
China's social media sphere, as many netizens responded
furiously claiming the alleged threshold is set too low,
especially considering China's first-tier cities' soaring living
costs.
"Just an annual income of 120,000 yuan will give you high income
status? Can you buy even one square meter of apartments in
Beijing, Guangzhou or Shanghai?" a weibo user commented on a
media report on Monday, referring to China's recent property
boom and buying frenzy.
However, in contrast to the popular sentiment online, unofficial
statistics show the real size of China's rising middle class,
widely seen as the new rich lavishing on expensive goods, might
not be as big as previously thought.
"According to our internal model, top 10 percent of urban
households have income per capita above 120,000 yuan in 2015,"
said Ernan Cui, Beijing-based China Consumer Analyst at Gavekal
Dragonomics.
($1 = 6.7714 Chinese yuan)
(Reporting by Yawen Chen and Ryan Woo; Editing by Jacqueline
Wong)
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