Lower income tax to counter earnings gap: economist

BEIJING - China should dramatically reduce personal income tax rates and reform the tax system to make it fairer, said a senior adviser to the People's Bank of China.

Li Daokui, who is also a professor at the School of Economics and Management at Tsinghua University, said personal income tax added only slightly more than 400 billion yuan ($61.57 billion) to the country's tax haul, less than 5 percent of the total fiscal revenue budget. However, the levy could lead to more serious social and political problems than other taxes if its reform lets the public down, Li wrote in an article published in the Shenzhen-based New Fortune magazine.

Li suggested that the government should sharply reduce the personal income tax rate and tax brackets to reduce the tax burden on the public.