Chinanews, Beijing, Mar. 19 – A recent survey shows that most Chinese people think the current interest tax system is unreasonable. Many people propose to cancel such tax.

 

The survey was jointly conducted by the Social Investigation Center of the China Youth Daily and the Information Center of Tencent website. Among 6,723 people that took part in the survey, 93.7% say it is not proper to impose interest tax. Among all the 10,000 short messages sent to the sina website, most people propose to rescind the interest tax system.

 

“I pay income tax before I get my salary. However, when I put my salary in banks, I have to pay the interest tax again, which makes my income even less,” someone say in his short message sent to the investigation.

 

“I actually haven’t made much money. And when I put by what little I earn in banks, it becomes even less,” many people claim.

 

Take the interest rate of 2004 for example. In 2004, the interest rate for one-year fixed savings deposit was 2.25% and the inflation rate was 3%. In other words, if someone put by 100 yuan in banks at the beginning of the year, when he withdrew his money and had his interest tax deducted by the end of the year, he could buy things that were worth only 98.8 yuan if those things were valued at the pricing system taken at the beginning of the year.

 

“Depositors actually make less money by saving in banks,” says economist Song Guoqing in an article. “Even if depositors make less money, they still have to pay interest tax. And most ironically, such tax is called ‘income tax.’”

 

Such situation improved a little in 2006, when the interest rate for one-year fixed savings deposit was raised to 2.52%. In that year, inflation rate was 1.8%. So when the interest tax was deducted, the actual interest rate for depositors was at 0.2%.

 

In 1999, Chinese policy makers revised the income tax law and resumed the interest tax. At that time, by implementing such law, the government wanted the public to take more money from banks and spend more in consumption. The measure also aimed at narrowing the income gap. However, when one takes a look at the revised law eight years later, one finds that the government hasn’t achieved its original purpose by publicizing such law. On the contrary, the law has caused a lot of controversy in society.