Researchers from the Chinese Academy of Social Sciences under the State Council were urging the central government to set up an office to better coordinate tax collection and help reduce the income gap between the rich and the poor, domestic media reported Wednesday.

"We need measures to help those on low incomes make more money and need to consider making the top earners pay more tax by improving the income tax policy and curbing tax evasion," Xinhua quoted the academy��s senior researcher, Li Shi, as saying.

The income gap between the rural and urban population narrowed slightly in 2004, according to the report.

Agricultural tax reductions and grain production subsidies helped push average annual income for rural residents up 6.8 percent to 2,936 (US$354) yuan last year, but rural incomes still lagged behind those of urban residents, whose average annual income was 9,422 yuan, the report said.

The year-on-year rural income growth rate never surpassed 5 percent prior to 2004.

Li's study also found the disposable incomes of the richest families, who account for 10 percent of the population, are eight times that of the poorest in urban areas, Xinhua said.

In urban areas, 60 percent of disposable incomes were below the average, and the proportion was expected to be higher in rural areas, the report said.

An unnamed State Council official was quoted in the report as saying the government was bolstering efforts to fight against tax evasion. But the official ruled out the possibility of raising the income tax, saying such a move would not encourage investments.

Source: Shenzhen Daily-Agencies