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Address tax situation

Updated: 2011-09-21 07:54

China Daily

That the Forbes Tax Misery Index published two years ago obtained abrupt prominence here may seem weird to outsiders. But growing public concerns over tax burdens, however, are a sign of improving taxpayer awareness in this country. And the impact will be felt far beyond economics.

The 2009 index ranked us second globally behind France, which prompted rebukes from the authorities and experts, as well as waves of passionate resonance from ordinary citizens.

In spite of this nation's recent craze for the limelight on the world stage, this was nothing glorious. That is why we didn't expect any official endorsement of such a dubious distinction.

The fairness of the index is open to question because there are plenty of technical difficulties constraining the comparability of tax burdens across nations. To what extent the Forbes approach was scientific is a matter for academics that we had better leave to the professionals.

But the index has raised questions that should not be put aside through categorical denials. The widening discrepancy between the growth of government revenues, which was as at a stunning 30.9 percent in the first eight months over the same period last year and that of GDP and residential income, calls for serious attention. A laissez-faire approach will prove costly for the stability-minded government. The present discourse on taxation offers an invaluable opportunity to rethink the fairness of tax burdens and their structures.

What annoys the average citizen is not just the dismal reality that tax contributions are catching up with those in countries with the world's highest incomes, but that incomes here remain low and stagnant. The prospect of a rich state with poor citizens will do no good to anyone. It simply will not be sustainable.

At this point, as is obvious in public reactions to the Forbes index, subjective feelings about the way taxpayer money is being spent dominate. One of the biggest complaints here is the sense of imbalance between what people contributed and what they got in return.

One can argue that actual tax rates are lower than nominal ones in our country and give examples. But that does not offset the feeling of deprivation when it comes to taxation. The Forbes index takes into account taxpayers' subjective feelings, along with tax burdens. What people feel about the manner in which public money is spent, or services the government provided, weighs heavily on their sense of well-being.

That is why we hope, besides pointing out the technical defects of the Forbes index, our officials and experts concentrate more on ways to rationalize taxation at home, and, equally important, alleviate citizens' negative feelings.

(China Daily 09/21/2011 page8)