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Income Tax and Public Opinion - From Little Things Big Things Grow

Editorial, cover,
Issue 526
July 4, 2011
Translated by Song Chunling

Original Chinese: [Chinese]

At the conclusion of the most recent meeting of the Standing Committee of the National People's Congress (NPC) on June 30, delegates passed an amendment to China's personal income tax law. The surprise was the fact that the draft amendment sumbitted to the NPC for a second hearing a few days earlier only mentioned lifting the exemption threshold for personal income tax from a monthly salary of 2,000 yuan to 3,000 yuan, but unexpectedly the NPC lifted the threshold to 3,500 yuan.

No matter whether your suggestions were incorporated into the final package, this last-minute change in the threshold represents a victory for all the people who submitted a total 237,684 suggestions to the NPC as part of an initiative to seek public opinion on the proposed amendments.

Despite the fact that opinion polls showed that 48% of the Chinese public wanted changes to the original package and with 35% of those polled directly opposed to the 3,000 yuan threshold, when the draft was re-submitted to the congress for a second reading at the start of last week's four-day meeting of the NPC, the threshold remained unchanged at 3,000 yuan. The only alteration from the original tax package was a reduction in the minimum tax rate from 5% to 3%.

Ordinary people like us assumed that after this minor amendment, the tax law was on track to be passed by the NPC on its second reading so that the percentage of the population liable to pay personal income would decrease from 28% to 12%.

But the final version of the amendment that was passed by the NPC surpassed our expectations. Raising the tax exemption threshold to 3,500 yuan (with 134 for, 6 against and 11 abstentions),  will mean that 60 million Chinese citizens will no longer have to pay personal income tax.

This is a victory for the will of the people. The move to ease the tax burden of low- and middle-income earners represents an acknowledgment of the voice of these people. All those who submitted their opinions on the tax should feel proud of themselves.

Regardless of whether they supported or opposed the final package, this is also a victory for those 82,707 web users who put forward more than 230,000 ideas about possible changes to the amendment. Although their number is a tiny fraction of the 84 million people who currently pay income tax, these people are the ones who refused to remain silent and who were willing to stand up and speak out about what mattered to them, to clearly state their own position and views.

By no means is this a victory of the “minority”. Although some experts have raised the question of whether these 230,000 submissions can really represent public opinion, we believe that all those who refused to remain silent - not only those who made formal submissions but also those who expressed their opinions by various other means - are capable of representing the views of the silent majority. They speak not only for themselves, but also for people like them.

In this respect, this victory we speak of is not really about the tax exemption threshold being raised by 500 yuan, or the fact that 60 million people will no longer have to pay income tax or that revenue will be cut by 160 billion yuan, rather it is a victory in the sense that when you’re willing to speak out, then it’s possible that your ideas will be realized. Although the initiative to reduce the minimum tax rate from 5% to 3% was also supported by the public, the move to increase the tax exemption threshold by an additional 500 yuan was a more direct response to the voice of the people.

This matters. Those 230,000 public submissions are like a touchstone for determining the true nature of public opinion. We can tell if public opinion is being taken seriously if opinions are patiently listened to, if they are politely and modestly dealt with and actively responded to.

As the members of the Standing Committee of the NPC were willing to take the 230,000 submissions they received from the public into account when voting on this amendment, next time there might be 240,000 or even more suggestions.

We are delighted to see this gradual change and we need more and more of these small victories of the “minority”. When hoping for a better world, we need to believe that what we are doing is worthwhile.

As far as legislation is concerned, something similar happened with regards to the deliberation of the vehicle and vessel tax law. The initial draft was widely criticized, but after the government sought to collect public opinion, the final draft of the amendments were altered accordingly. Although some like to present cases like this as being inharmonious, we firmly believe that this is in fact the way to achieve real harmony.

Last week, in a speech to the British Royal Society,  China’s Premier Wen Jiabao said that “tomorrow's China will be a country that fully achieves democracy, the rule of law, fairness and justice.”

The realization of these hopes rests on the shoulders of our generation.
If we want to live in a democratic, fair and just country, then it’s up to every single one of us to push to make all these small changes, if we do this, our hopes for the future can’t fail.

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