Middle class drives quiet income tax rebellion
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Given the growing government budget and reliance on investment-driven economy, the middle class dread future inflation. The slow progress in developing a social welfare system that matches the developed countries further intensifies middle-class anxieties.
This is why the tax resistance actually goes beyond tax policy. It relates to the burden of social security and even the legitimacy of profits that the government makes through land leasing.
Spending on housing eats a significant part of a middle-class family's lifetime earnings. And they cannot help asking whether they are actually better off as a result of the government taking their money.
The association between tax policy debates and the middle class is important because it suggests that the public has started vigorously influencing the national policy.
The influence might not take the form of blatant political campaigns, but might materialize through subtle media efforts. It is questionable whether everyone will benefit from this, since there's little thought for the interests of the poor in the middle-class tax agenda.
It is, however, a good sign for tax policymaking. The past history of China's tax policymaking was characterized by departmental in-fighting and competition between different levels of government.
As a result of the growing wealth and capability of the middle class to influence the policy, the income tax debate is a significant step to incorporate the public sentiment into a fairer tax design.
