China is speeding up income tax reform and is likely to release a specific plan in the first half of 2017, the state-owned Economic Information Daily reported on Wednesday.
One of the key reforms will be extending income-tax deductibility to items such as re-education expenses and first-home mortgage interest payments, the paper said, citing a member from the Internal Control Institute affiliated with the Ministry of Finance.
The reform will not simply be raising the minimum tax deduction rate as done in the past, as that would be preferential to the high income group and further deepen income inequality, Zhang Lianqi, a member from the Internal Control Institute, was quoted as saying.
Income tax only makes up 6.3 percent of total tax revenue in China last year, compared with 45 percent in the United States, the paper said.
China’s state cabinet released a document in October on income distribution reform, noting it would use taxation to narrow the income gap between different groups.