CCP Economy from Number Change of Paying Population in Personal Income Tax

Translated by: Wendy

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An original article written by Sohu Financial Network on March 12, 2021 [The Personal Income Tax threshold is too low?” How much is the monthly income of more than 5,000 yuan for 1.4 billion people? Finally, there is an answer], a recent report by Shanghai University of Finance and Economics indicates that the current monthly threshold for personal income tax of 5,000 yuan in the Communist Party of China is too low, and relevant experts suggest that it should be raised to 7,000 yuan or 10,000 yuan, and with which is more suitable for the development of the current economic situation. 

Data shows that the personal income tax has been adjusted four times with the threshold of 800 since 1980 to 1,600 yuan in 2006, 2,000 yuan in 2008, 3,500 yuan in 2011 and 5,000 yuan in 2018. 

The article points out that many people are concerned about how many people earn more than 5, 000 yuan per month in the country of 1.4 billion population. The answer is that there are a large number of people, but the proportion is not large. There are three sets of data that reflect the real situation: 

1. At present, the population of paying personal income tax is less than 100 million,whose monthly income is more than 5,000. However, in 2007, this number was 153 million with threshold of personal income tax of 1,600 yuan.  The data is from the research report of Southwest University of Finance and Economics, and the number of taxpayers is reduced by 60 million comparing with the numbers in 2007.

2. The per capita disposable annual income, shown by the National Bureau of Statistics, was 32,189 yuan in 2020, an increase of 2.1 percent in real terms, with an average per capita disposable income of 2,682 per month. In 2019, the average monthly salary of private organizations is 4,467 yuan, and the personal income tax threshold of 5,000 has exceeded that of the vast majority of wage earners in the CCP country. 

3. According to a report released by Beijing Normal University, only 71.82 million people earn more than 5,000 yuan a month, accounting for 5.13% of the total population in China. 

In other words, 94.87% of the population has a monthly income of less than 5,000 yuan, and living in middle sized cities and rural countryside. The 5.13% population which are mainly inhabiting in big cities, where the cost of living is high for them.  Many people are struggling with housing loans, car loans, burdening of raising children, or having a second child, supporting the elderly parents/grandparents, and others. Even if the personal income tax threshold is raised, will it bring more income to their stretched lives?  And moreover, the number of taxpayers will be even less, government revenue will be decreased, and basic sources of social security are definitely to be reduced.  In addition, there are more and more unemployed people in large and medium-sized cities, which is reflecting to the government’s constant shouting: six guarantees, six stability, flexible employment since 2019. The real data will not be overshadowed by exaggerated meaningless propaganda.

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