By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-07-24 16:02

In the first half of this year, China collected 167.8 billion yuan (US$22.2 billion) in personal income tax revenue, up 28.5 percent year on year, according to statistics from the State Administration of Taxation, China Youth Daily reported today.

The growth in income tax revenue was due to rapid income growth and sound implemention of a self-declaration system for those making more than 120,000 yuan a year, according to the tax administration.

The higher tax revenue has also triggered debates over tax reduction policies and Wu Ruidong, a local taxation official, said in an article in the paper that the time is ripe for the government to cut taxes.

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According to Wu, China can now bear the fiscal revenue reduction. Statistics show that fiscal revenue reached more than 1 trillion yuan in 1999 and broke 3 trillion yuan in 2005 and realized a record 3.9 trillion yuan in 2006.

In addition to the fiscal revenue, the State owned enterprises (SOEs) under supervision of the central government recorded 720 billion yuan in profit, China's foreign exchange reserve also reached US$1 trillion.

The official also said tax reduction policies would compliment the historical tide.

According to Wu, on the one hand, a tax increase would boost China's fiscal revenue, making the government supply more public goods and provide better services for the public. Meanwhile on the other hand, it could stimulate the nation's investment to promote China's economy.

But the tax jump also imposed heavier load upon taxpayers. The Forbes Magazine's most recent "Tax Misery Index" chart rated China as one of the most heavily taxed nations in the world.

In recent years, some other countries, including the United States, Germany and France have launched tax reduction plans.

Although some experts in China have called on the government to reduce tax in recent years, but no tax reduction plan has been put into practice as fiscal revenue concerns.