(ECNS) -- A plan by the State Council, China's cabinet, to use taxes to adjust personal income has caused heated discussion over whether an annual salary of 120,000 yuan ($17,000) is the threshold for a high-earner in China.
Experts from the Ministry of Finance and the State Administration of Taxation told Xinhua on Monday that the alleged amount is a rumor and nothing new.
Several experts also told China Business Network that the amount is neither a credible benchmark nor the stated policy of China.
The State Council said China will gradually establish a comprehensive individual income tax system amid efforts to reduce the burden on middle and low-income earners and appropriately increase taxes on high-income individuals.
Although the State Council hasn't defined high-income earners, in 2006 the State Administration of Taxation placed 120,000 yuan as the benchmark for tax declaration. The administration said in 2010 that people who earn 120,000 yuan a year shoulder a legal duty to pay tax.
But Liu Peilin, a researcher with the State Council Development Research Center, said China has no official criterion on a "high income".
Zhang Jianjing with PricewaterhouseCoopers said most people in Beijing, Shanghai, Guangzhou, Shenzhen and in second-tier cities earn more than 120,000 yuan a year but they also face high stress from costs in housing and education.
An annual income of 120,000 yuan wouldn't make a person middle class in some large cities, said Yang Zhiyong, National Academy of Economic Strategy, CASS, noting that income varies across regions.
Yang added that China's new taxation reform will give more consideration to family, by including spending on housing and education, rather than just looking at annual income.
Experts also said difficulties in taxation reform include data collection on individual income and assets. New technologies, including big data and cloud computing, are expected to increase the data collection on individual incomes.
