China to reform income distribution mechanisms

China has unveiled guidelines to reform its income distribution mechanisms, amid growing public concern over a widening wealth gap. The State Council says the move aims to increase residents' income, narrow the income distribution disparity, and regulate the distribution order.

Tuesday's guidelines offer directions on an extensive range of policy areas, such as taxation, subsidies, salary system, financial regulation, household registration and social security.

The guidelines set a target of reducing the number of people living below the poverty line of 2,300 yuan in per capita annual net income to around 80 million as of 2015, which is a drastic fall from the 128 million, who, mainly in rural areas, were defined as poor in 2011.

Meanwhile, a long-term mechanism to promote farmers' income will be established. Farmers will be guaranteed proceeds from transferring their contracted land plots, and will collect higher revenues from gains in the land value. Rural migrant workers will be helped in registering as urban residents, and will benefit from all basic public services in cities.

In other efforts to swell ordinary resident's pockets, China will promote fairer employment, raise grass-roots civil servants' salaries, cut the tax burden for small firms and demand more listed companies pay dividends to individual investors.

The country also aims to strengthen regulation on high-income groups. Rules that demand government officials report their incomes, real estate assets, investment and family members' jobs will be implemented more strictly. State-owned enterprises must impose ceilings on payments to senior management, and make sure senior staff's salary growth is slower than the average level for other employees.

The government will gradually expand experimental property taxes, collect consumption taxes on more high-end entertainment activities and luxury products, and study imposing inheritance taxes "at an appropriate time."

Finally, expatriates will no longer be exempt from personal income taxes on stock dividends and bonuses they obtain from foreign-funded enterprises in China.