Editor’s note: This translated article is written by Wang Shichuan (王石川), a well known reporter for People’s Daily. The article draws upon this year’s revelation that steamed bread is subject to a staggering 17% tax rate. This news has had a domino effect in that Chinese people have now begun questioning other tax rates and are now demanding greater clarity on how much they’re being taxed and where that money goes.

If it wasn’t for a proposal by Pan Yaomin (vice president of a flour company in Shandong Province) during the Chinese People’s Political Consultative Conference (CPPCC), the majority of the public including the media present during the conference, wouldn’t know that there is a tax on steamed bread (a.k.a. mantou), nor would they know that this tax rate is as high as 17%.

CPPCC member Pan Yaomin believes that the 17% tax rate on steamed bread is too high and that this tax not only creates an extra burden on tax payers, but that it does nothing for the country’s food safety. At present, consumers are loudly grumbling about the price of steamed bread in supermarkets, with one piece of steamed bread currently costing 1.2 RMB. However, since the tax rate of steamed bread is as high as 17%, for every one RMB paid by consumers, 0.2 RMB is actually tax.

Many netizens have been stunned by this news and have begun questioning the absurd fact that of all things, steamed bread is subject to a tax levy. But why is it that netizens have been so outraged about this tax in particular? And why is it that they’re at a loss of words when they read the sentence: “For every one RMB paid by consumers, 0.2 RMB is actually tax.”? The reason for this is the lack of general knowledge associated with tax revenue, as well as the fact that for years, the relevant government departments in China have only been emphasizing the positive side of tax paying. Despite the fact that tax paying is an obligation of every Chinese citizen, the government deliberately neglected to publicize general tax related knowledge to the public and failed to share the most basic information about taxes with the people.

We have all clearly been paying taxes, but more often than not, we don’t know when or how much tax is actually being charged. According to a report, a 500 RMB item of clothing in a department store includes 17% VAT and 13% sales tax; a 40 RMB cinema ticket includes a 12 RMB sales tax, which means that a family of three going to the movies must fork out 36 RMB in taxes; in every 500g bag of 2 RMB cooking salt, 0.29 RMB is VAT and 0.3 RMB is urban construction tax. However, the majority of people are not clear on these rates and have no idea that they’re paying high taxes on clothing, cinema tickets and salt. Most of the public do not know these facts and the blame can only be attributed to a failure on the part of the relevant government departments. In many Western countries the usual taxation methods are precise and clear: product labels in supermarkets and shops clearly list the various tax rates of the items. In China however, one simply cannot find similar methods at play.  

So how heavy is the tax burden for the Chinese people? One observer made the following calculation: if your monthly salary prior to taxes is 10,000 RMB and you deduct the relevant taxes, you’ll only be left with 7052 RMB. If you were to actually receive a pre-taxed salary of 10,000 RMB, the company would actually have to pay 14,150 RMB (so in total about 7098 RMB out of 14,150 RMB would be collected by the government as taxes and social security fund ). If you bought a house worth a total of one million RMB, about 500-600,000 of that money would pass through various channels and eventually land in the pockets of the government. The normal taxes for any item you buy will be around 15%, but you’re most likely not going to know about it.

Touching upon the “steamed bread tax” once again, it is clear that the tax burden in this country is quite heavy; heavy tax burdens means greater hardships for the Chinese people. Tax rates must be publicized and apart from reducing taxes, tax payers should be informed about their rights and the public needs to be clarified on where specifically the taxes go.
 

Source: pinglun.eastday.com
 

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Keywords: tax rates China Chinese people’s tax burden Steamed bread tax China