China to amend individual income tax law

We just talked about how the government is running a fiscal deficit, yet here they are talking about reducing their revenue from income tax. This is a pretty clear indication that BJ has money to burn and can afford to pay for a whole host of tools to bring down inflation and tweak the economic growth to a rate of their choosing.

Article reads, “The amendment revealed would keep the monthly tax exemption income threshold at 3,000 yuan ($461.5).” Since first reading the article, this adjustment has become law. The old tax system required income tax to be paid on anything above 2,000 RMB per month. So this is a big move. One that I welcome as a buyer.

Here is why this news is important to us. Simply put, regardless if the the factory owner pays the personal income tax or if the factory worker pays themselves or if they split it, the bottom line is that raising the threshold of the income level where personal income taxes start to get paid will help factories keep costs down. Especially factories that are labor intensive or industries that have a lot of lower end white collar workers. Keep in mind the average line worker in a factory in China is under 2500 RMB per month, so bumping the threshold up to 3000 effects more than just the unskilled masses but also will put some smiles around the front office as well.

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