Statistics from State Administration of Taxation indicate that in 2001 China amassed revenue of 99.6 billion yuan from personal income, a figure surpassing the consumption amount though turning out the country's fourth largest tax category.

But it represented merely a 6.6 percent of China's total tax revenue far from the developed countries' 30 percent. By international 15 percent standard, China's revenue from personal income should be at 225 billion yuan, this is to say a least loss of 100 billion yuan.

Typical is Liu Xiaoqing's tax evasion making a hot topic to people in China. Every one should pay tax according to law, but how should we treat the wealthy people's tax evasion and what measures should our taxation departments take?

China began to levy taxes on personal income since September 1980. After years' efforts, tax levy taxation in China has been gradually upgraded. Especially 1994-2001, the new system was set up, various taxation departments intensified tax levy on high-incomers and reformed the system. The income tax amount increased to 99.6 billion yuan in 2001 from 1993's 4.682 billion yuan.

Currently, some problems are hindering the levy of taxes on personal income: government exercises no efficient control over income taxation, no sufficient adjustments are made of the tax levying line on higher-level salary earners, hence serious personal income tax evasions occur.

One of the reasons found unsatisfied by citizens is a low tax levy starting line. Mid-and-low salary level earners become main taxpayers; the starting line of 800 yuan will not be changed, according to person in charge of the administration.

Personal in charge of the administration said that we should make practical analysis of the problem.

Tax fraud and evasion are by no mean few are true. This is especially so among those of the affluent crust, they adopt various means to cheat on tax levying; this is another reason citizens would not like to see. Taxation levies from the wealthy is much less than the common run, this is also a topic on the lips of people.

In China, about 40 percent of taxes on personal income are from wage earners, mid-and-low level wage earners pay the bulk of taxes, while some of those high-salaried pay less by practicing tax evasion.

Inequality of responsibility and duty is one of the reasons for tax evasion.

This implies: one is inequality of responsibility and duty between wage earners and high income reapers, although every one should be equal under the law, in fact, salary earners' tax payments top 45 percent. High-income earners occupy more social resources, but they pay less. A very bad effect of this is it causes people to evade taxes as much possible as they can.

The second reason lies on relations between taxpayers and the government. Economists regard taxation as "the trade between government and the taxpayers", that is to say, in order to levy tax, government should provide services to taxpayers, the wealthy take a large social responsibility, but government consider less for those people's rights.

Citizens are duty bound to pay tax, in the meanwhile, they have the right to supervise the government how to use the money collected. The government has the right to levy taxes, but it also has the obligation to provide services for citizens, only the two work well, can social system be run in an orderly fashion.

After Liu Xiaoqing's tax evasion case was brought to light by news media, the State Administration of Taxation held a press conference and expressed that it will take six measures to further intensify management on taxation especially on those high-income tax evaders.

The administration will speed up construction of a massive setup monitoring on personal income taxation, it will set up a nationwide file management system supervising high-income earners. A network linking the personal income tax system onto that of the government will also be built to fully utilize public information and data to strengthen management.

( September 6, 2002)