China ranks 3rd on 'tax misery' list
By Li Fangchao (China Daily)Updated: 2007-05-17 11:34
China ranks third among the world's most heavily taxed
nations, according to the latest "Tax Misery Index" chart released by Forbes.
"Forbes Tax Misery Index", reflects how much of your paycheck you will take home after the government takes its cut.
China, with an index of 152, was eight points below last year's figure. It was placed second last year.
France and Belgium lead the pack with 166.8 and 156.4 respectively on the 52-country list.
The United Arab Emirates stands at the bottom with a mere 18, which means people take home almost every cent they earn.
China's Hong Kong Special Administrative Region ranks third from the bottom.
"The index shows an executive's gross salary may be reduced by almost 60 percent if he has his office in Denmark or Sweden," Forbes said.
"By contrast, the index shows there's no reduction in the Middle East nation of Qatar, where executives get to keep every euro, dollar or drachma their company pays them," it added.
The misery score is 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.
And the higher the index is, the more miserable it is.
Despite the decrease in the index this year, China remains the most heavily taxed nation among Asian countries, the index showed.
And a report accompanying the list said that China has seen an obvious improvement over last year, with 8 points down from last year's second position.
Its taxation reform plan has achieved good progress and various factors show that the ranking will continue to fall next year, the report said.
European countries and China have been at the top of the list since its inception in 2000.
The magazine said it compiled the list for the reference of companies and individuals to pick the place where they intend to work and live in a global perspective.
An Tifu, a finance expert with the Renmin University of China, wrote in an online column that it is "obviously exaggerated" to say China has the third heaviest tax burden in the world, keeping abreast with other developed countries with much higher income and a more complete social security system.
An cast doubt on the way the statistics are compiled for the Forbes list.
"Different countries have different taxations and various ways of calculation, to pick five or six indices cannot reflect the whole picture," he said.
He also said that a series of measures China has taken to reform its taxation system should not go unnoticed.
The country has doubled its threshold of personal income tax to 1,600 yuan ($208) and will unify its corporate tax rate for both domestic and foreign companies at 25 percent.
(China Daily 05/17/2007 page3)
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