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Forbes' tax misery ranking 'inaccurate'
Latest Updated by 2007-05-28 15:47:09
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Officials and experts sought to rebut a recent "Tax Misery Index" released by Forbes, saying China's macro tax burden remains relatively low compared with other countries.

The magazine's most recent "Tax Misery Index" chart rates China as the third most heavily taxed nation in the world.

China follows France and Belgium on the 52-country list, with an index of 152.

The misery score is based on the sum of corporate income, personal income and wealth taxes, plus employer social security, employee social security and VAT/sales taxes at the highest marginal rate in each locale, Forbes said.

In an interview with the overseas edition of the People's Daily over the weekend, Shu Qiming, a senior official with the State Administration of Taxation (SAT), said China's macro tax burden level remains low if considered from a global perspective.

The macro tax burden reflects the proportion of a country's gross domestic product contributed by taxes.

China's macro tax burden was 18 percent last year, Shu said. The figure was 3 percent lower than the average level among developing countries and about 12 percent lower than in developed ones, he said.

Liu Huan, a professor from the Central University of Finance and Economics, told the newspaper that the list was not scientific because China's tax structure differs from those in Western countries.

"A consumption tax is universal in Western countries, while China only levies such a tax on special products," Liu was quoted as saying.

And China does not have a wealth tax, which Western countries usually do.

And a heavy tax burden does not necessarily mean more misery, Liu said.

"Though the tax burden is almost 50 percent in some Northern European countries, having good social welfare services, like free medical treatment and a large pension, keeps citizens satisfied," Liu was quoted as saying.

Meanwhile, Liu said, China also has many preferential policies to lower the tax burden, so the actual rate could be lower than it appears on paper. A rough estimate is that the country's various tax-reduction policies should lower the macro tax burden by about 10 percent.

Editor: Yan

By: Source: China Daily Website
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