The huge group of Chinese with middle and low incomes, the major source of the nation's personal income tax revenues, undoubtedly received good new this week.

The national legislature on Tuesday started to deliberate on a draft amendment to the personal income tax law, focusing on lifting the tax collection starting line from 800 yuan (98.8 US dollars) to 1,500 yuan (185 US dollars).

Adoption of the amendment would signify that at least one tenth of the current taxpayers will be completely exempted from the burden, while the rest would benefit by higher net earnings.

To 32-year-old Shanghai citizen Chen Lin, if the draft is passed and takes effect, he will have 150 yuan (18.5 US dollars) added to his family's monthly income.

Typical white collar workers in Shanghai, Chen and his wife are each paid about 3,000 yuan (370 US dollars) every month.

Their family is considered to be a middle-income one in Shanghai. However, the life of the couple is far from that of the real middle class.

Chen said they have to spend one third of the family income repaying their 400,000-yuan (49,320 US dollars) housing loan. Their cost of living takes up another one third. So their disposable income is merely 2,000 yuan (247 US dollars) every month, half of which, however, is saved for their child.

"We used to see films before marriage, but now we seldom go out for entertainment just to save money," said his wife Su Ruiwen.

They have already made plans for the expected additional 150 yuan (18.5 US dollars). Part will be spent on medicine for their parents while the rest will be used to retrieve their long lost recreation.

"Though our income will not grow much, I think the amendment will create a fairer income distribution system," said the wife.

According to the Shanghai Municipal Statistical Bureau, the average monthly income of its citizens amounts to 1,847 yuan (228 US dollars). Experts say that people with a salary of around 1,500 yuan (185 US dollars) will benefit most from the starting line lift.

Though Beijing's starting line was already lifted to 1,200 yuan (148 US dollars) in 2003, the draft is still receiving a warm welcome from the general public, especially those with monthly salaries between 800 yuan (98.8 US dollars) and 1,500 yuan (185 US dollars), said Shi Xiaojun, vice director of the municipal tax bureau's personal income tax section.

Ma Huijun, a state-owned company accountant earning 1,300 yuan (160 US dollars) every month, expresses his greatest support to the draft.

"In Beijing, people earning the same as me have to carefully spend every yuan," said Ma. Though the adjustment will bring him less than a 50-yuan (six dollars) earning increase, he is still happy with that.

According to statistics from the State Administration of Taxation, China collected 170 billion yuan (21 billion US dollars) in personal income taxes last year, 65 percent coming from people with middle or low incomes.

If the levy bottom line is raised, this huge taxpayer group will acquire 20 billion yuan (2.46 billion US dollars) in income growth, which also means a decrease of the same sum in the national fiscal revenue.

Yet lawmakers have also proposed that people with high incomes should voluntarily file tax returns and pay taxes themselves.

Professor Liu Huan, from the Beijing-based Central University of Finance and Economics, highly approves of the amendments.

"As an effective measure to narrow the gap between the rich and poor, the change in the measure of personal income tax collection will, to a great extent, affect the public confidence in the government and it is also crucial to social stability."

The amendment is just a very small step, he said. "However the fact that the government could respond to the people's immediate concern shows its sincerity in building a harmonious society."

China's most popular Website, www.sina.com.cn, recently conducted a survey on the draft amendment.

Among the more than 60,000 respondents, over 70 percent support the adjustment while less than 1 percent say they are satisfied with the status quo.

A large number of respondents hold that 1,500 yuan (185 US dollars) is still too low as a bottom line, while some others argue the starting line should be varied in different places due to the unbalanced earning and consumption levels in the country.

At the same time, some economists say that apart from narrowing the income gap, one of the most important goals of the personal income tax is to improve the entire social welfare system.

They hope that the government will pay attention to this, so as to protect the interests of the tens of millions of middle- and low-income Chinese in a fundamental way.

Source: Xinhua