Setting the Bar Too High, Too Fast（1）

From Cover, issue no. 342, Nov 19 2007
Original article: [Chinese]

The local tax bureau of Beijing's Shunyi district has imposed fines on those who have yet to file their individual income tax returns. According to the Beijing Times, most of those fined paid 200 yuan each.

Compared with the upper limit of 10,000 yuan prescribed by the previous notice of the State Tax Bureau, a 200 yuan fine is barely a slap on the wrist, meant mostly to warn and remind as opposed to punish. If this is the case, it is clear that the fine itself is not what is important to the tax authorities.

This reveals a more humane side of taxation watchdogs. However, we still believe that the fines, or any sterner punishment, in response to delays in income filing though legally defensible are not justifiable.

This is the first year of individual income tax filing. Last year, taxation departments spent several months preaching policies, but detailed guidelines were not promulgated until the end of the year. If a tax payer happens not to have the habit of collecting various receipts and proofs, he will likely be unable to report his exact yearly income, thus making such a late dissemination of the new guidelines useless.

Tax authorities know this and thus did not choose to demand excessive fines this first year. But taxpayers are entitled to investigate whether or not the changes were announced early enough. If the announcement was made at the end of last year, the start time for declaration should be 2007.

And even if the declaration process is sound and well understood, taxpayers still have the right to question taxes themselves, and claim on all tax deductions available to them.

Tax authorities should give taxpayers explanations. For example, how long will problems exist in the system? Can they be solved now? If not, why? How can taxpayers’ rights be protected if the authorities only administer the taxes, but fail to provide answers to these questions or supply the related timetable? With this is in mind, we oppose the punishments already doled out to those who have failed to report.

It is estimated that this year’s financial revenue surplus has reached about 700 billion yuan. Statistics show that in the first half of this year, the year-on-year increase of individual income tax revenue exceeded 28 percent, while GDP stood at 11 percent and urban income grew 14 percent. Why not start up tax rebate mechanism to return the excess government revenues to the citizens? Why not take advantage of this opportunity to adjust the tax system in order to more benefit them?

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