China's political advisors are urging the government to abolish the seven-year-long tax on the interest of bank savings, saying that imposing the tax harmed the benefit of low-income families and contributed to the failure to stimulate domestic consumption.

"Rich people with huge bank savings don't care much about the tax. But to people with middle and low incomes, the tax has really affected their interests," said Qin Xiao, one of the 27 political advisors who jointly submitted the proposal.

China began to levy a 20-percent tax on interests of savings deposits since 1999 to all Renminbi and foreign currency savings accounts that individuals opened in Chinese banks, chief for reducing mounting individual bank savings.

"Given inflation and the interest tax, the real interest rate of bank deposits has almost become negative for individual citizens," said Wang Zhaobin, another political advisor and vice chairman of the federation of industry and commerce of Henan Province.

The current benchmark interest rate for one-year deposit rate is at 2.52 percent, according to the People's Bank of China, or the central bank.

Qin, also board chairman of the China Merchants Group, said the interest tax was issued with the purpose of reducing China's bank savings, boosting consumption and curbing deflation in the 1990s.

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