Middle class drives quiet income tax rebellion
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Chinese taxpayers are quietly angry.
Following a draft amendment introduced by the State Council in early March to alleviate individual's tax burden, public discussions over tax reform swung overwhelmingly toward the opinion that even existing taxes are unduly heavy.
This movement is being driven by the emerging urban middle class, who bear the brunt of China's tax burden.
Income tax only applies to relatively high earners by Chinese standards. Farmers are, technically, excluded from tax, though local officials often force them to pay "administrative fees" that serve the same purpose.
In some well-circulated news reports, taxpayers adroitly calculated that almost half of their earnings ultimately went to the government, in forms of not only income tax but also value-added tax and social security fees.
A radical calculation claims that 6,600 yuan ($1,006) out of an income of 10,000 yuan ($1,524) per month was finally taken away by the government. This radicalism is, however, retorted by some tax experts, who point out that statistics shows that government revenue only accounts for less than 30 percent of GDP.
A closer look at this wave of tax resistance offers some surprising observations.
China's middle class certainly don't reject the idea of a strong government, as tax rebellions in the US tend to. It's not intuitive mistrust of big government that prompts their opposition, but a rational calculation of the burdens they're asked to shoulder, combined with a growing willingness to question what they're receiving in return.
Many online posts and press articles used quantitative analysis and showed a remarkable ability to understand China's tax system.
This isn't a visceral populist resentment from grass roots, but a rational and well-established attempt to influence the policy in the interests of the middle class.
The middle class have been growing, due to the robust economy. They are also gravitating toward first- and second-tier cities, which also have a strong media presence.
A natural alliance has been forged between the middle class and the media.
As the income of middle class steadily grows, the progressive tax rates and social security charges applying to them also grow. Feelings of a growing tax burden therefore mount. Besides, feelings of insecurity run more deeply.
The increase of people's wealth as well as mounting prices and a soaring real estate market have trivialized the last generation's savings. The same thing could happen to any well-off middle-class family.
