The threshold for personal income tax in China is not likely to be raised to RMB3,000 [per month] as 60% of the salaried workers are paid that amount, Ni Hongri, a research with the Development Research Center of the State Council, said at a recent seminar on the Chinese economy. “An ordinary worker receive less than RMB2,000 in northeastern China,” said a Jilin provincial official. “Very few people in those provinces would be supposed to pay tax if the threshold was raised to RMB3,000.” The Chinese government is figuring out ways to spur domestic demand, and hiking the personal income tax threshold is considered to be an option. But experts say it is the underdeveloped social welfare, rather than incomes, that holds back the Chinese people’s marginal propensity to consume.

$1 = RMB6.8

Source: http://www.cs.com.cn/xwzx/03/200812/t20081215_1682970.htm

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