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China's top legislature on Tuesday started to deliberate on the draft amendment to the personal income tax law, a major move that experts see is meant to narrow the widening gap between the country's rich and poor.

The draft amendment includes lifting the tax collection starting line from 800 yuan (98.8 US dollars) to 1,500 yuan (185 US dollars) and forcibly asking high-income groups to file tax returns and pay taxes themselves.

Shi Yaowei, director of the tax department under the Ministry of Finance, said among China's 24 categories of taxes, personal income tax is the most important one for adjusting social property allocation.

The past dozen years witnessed a constantly widening gap between the rich and poor in China. Nowadays, China's Gini Coefficient (an internationally accepted measurement of income equality) has reached 0.447.

"According to the international accepted level, when a country's Gini Coefficient is above 0.4, it means the country's rich-and-poor gap is excessively wide," said Shi.

Statistics show that wage earners are China's mainstream personal income tax payers. In 2004, China's revenue from personal income taxes was 170 billion yuan (21 billion US dollars), 65 percent of which was collected from salaried workers. The phenomenon went against the fact that 20 percent of China's population possess 80 percent of social wealth.

Liu Huan, one of China's tax experts, said that the 300 million wage earners have borne the country's major tax burden. They seldom evade taxes because most of them have had only one income source, which is easy for tax authorities to inspect. Another reason is that, their work units or companies often withhold their taxes in advance before giving them salaries.

"However, the rich always have had more than one income source and more opportunities to evade taxes," he said.

Since 1993, China's monthly personal income tax collection starting line, or monthly tax deduction line, has been fixed at 800 yuan. In 1993, only 1 percent of citizens earned more than 800 yuan one month, but in 2002, 52 percent of their monthly salary exceeded 800 yuan. In 2003, the consumer price index had increased by 60 percent from that of 1993.

Obviously, the monthly deduction of 800 yuan no longer covers citizen's basic living expenses and should be higher.

"To lift the monthly deduction, or say personal income tax starting line, from 800 yuan to 1,500 yuan, means that the government would lose more than 20 billion yuan of tax revenue, " said Shi Yaowei.

He evaluated the 1,500-yuan tax deduction line as a reasonable option between government's financial capability and public expectation.

Article 8 of the current law on personal income tax reads that "For individual income taxes, the income earner shall be the taxpayer and the paying unit or individual shall be the withholding agent. Taxpayers that receive wages or salaries from two or more payers, or taxpayers without withholding agents, shall file tax returns and pay tax themselves."

In reality, when the withholding agent failed to withhold tax, or did not withhold enough tax, he was fined, but taxpayers did not bear any legal responsibility. Therefore, a large number of high-income citizens dare to evade taxes.

But the draft made amendments to that Article. As long as one's income exceeds a certain sum designated by the State Council (or the cabinet), the taxpayer should file tax returns and pay tax themselves. The tax authorities are entitled to fine those who do not file tax returns or file inadequate tax returns, and to administer legal punishments. The maximum fine could be five times more than the tax volume the taxpayer originally needs to pay.

Shi believes that through relieving middle- and low-income citizen's tax burden and strengthening tax collection from high-income citizens, the gap between the rich and poor will be narrowed.