China's tax burden at 20 per cent is still lower than that of most developing and developed countries, the government has claimed.
China's tax burden, measured by tax revenue divided by gross domestic product stood at 16.93 per cent in 2005, compared to 20.6 per cent for developing countries or 30 per cent for industrialised nations, the State Administration of Tax said in a report published over the weekend.
Inclusive of social security tax, the current tax burden at 20 per cent is still lower than the developing nations' 26 per cent to 29 per cent and 37 per cent to 41 per cent of the developed countries.
China recorded an annual economic growth of 12.94 per cent between 2001 and 2005 in current prices. In the same period, the government's tax revenue had been growing at 19.5 per cent a year, raising concerns among some sectors of the public, the report said.
The SAT report acknowledged that the country's tax burden climbed from 13.83 per cent in 2001 to 16.93 per cent in 2005, but argued that it resulted from many factors other than higher tax rates.
China's dynamic economic growth, particularly the strong growth of the manufacturing sector that carries higher tax rates, the rapid growth of China's foreign trade and improved tax collection regime contributed to the surge of government's tax revenue, it said.
It further pointed out that a reasonable rise in tax burden is justified by China's social and economic development, as the building of a well-off society requires government to provide better infrastructure facilities and public services for which more money is required.
The building of a 'harmonious society', another major goal of the ruling Communist Party of China-led government, requires tax regime to play a bigger role in wealth redistribution, the report said, adding that the surge in corporate and individual income tax revenues in recent years indicates that the government has been doing the right thing.
Though the general tax burden has been rising, some industries and products have had their tax rates slashed in recent years.
China doubled its minimum taxation threshold from 800 yuan to 1,600 yuan ($200) this year to ease the burden on the common man. The 800 yuan threshold was fixed 25 years ago.
China's tax revenue rose 20 per cent year-on-year to a record high of 3.0866 trillion yuan ($381 billion) in 2005, the SAT said recently.
The figure, excluding tariffs and agricultural tax, represented an increase of 514.8 billion yuan over the previous year.
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