A Chinese government plan to raise the lowest income tax threshold from 3,500 yuan per month to 5,000 has provoked heated discussion. One sticking point is that China's regions vary significantly in median income, and in the largest cities higher incomes would render such a change relatively meaningless.
In light of the huge regional caps in economic development, income and consumption, commentator Zhang Wenchun proposes that the central government grants more autonomy to local governments to determine their own lowest taxable limits. Writing for The Beijing News he says a national definition of taxpayers should first be set, then local governments should have the right to determine the tax base (taxable income, deductible items, and amounts) and methods of collection.
More controversially, he calls on the central government to give all personal income tax revenue to local governments. Since 2002, personal income tax revenue has been split 40/60 between the central and local governments. It accounted for merely 8.29 percent of all tax income in China in 2017, far lower than the 25 percent average in OECD countries.
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