China is proposing to raise its monthly individual income tax levy threshold from the current 1,600 yuan (US$217.69) to 2,000 yuan, according to a draft amendment to the law on individual income tax.

The individual income tax threshold increase was believed to relieve the economic burden of medium- and low-income earners amid the recent price increase of some goods.

On Sunday, the draft amendment was submitted to the Standing Committee of the National People's Congress (NPC), China's top legislature, for deliberation.

Finance Minister Xie Xuren told the legislative session that "raising the threshold of individual income tax collection from 1,600 yuan to 2,000 yuan means a reduction of 30 billion yuan in state revenue".

However, the rise in personal income tax collection threshold would free 70 percent of income earners from paying income tax. The current threshold of 1,600 yuan makes 50 percent of income earners free from paying the tax.

Xie said "the increase of individual income tax collection threshold is within the country's financial bearing capacity and aims to relieve the economic burden of medium- and low-income earners".

China's consumer price index climbed 6.9 percent in November, marking the fourth consecutive month the index had been above six percent. Price increases for various goods have already placed a burden on common families.

The individual income tax cutoff point was raised from 800 yuan a month to 1,600 yuan starting in 2006. This was based on an investigation of the then citizen's consumption expenditure for basic living costs.

"Over the recent two years, citizen's basic consumption expenditure for basic living further increased. This required us to readjust the individual income tax starting point again," Xie said.

He predicted every income earner would bear an annual consumption expenditure of as much as 19,030 yuan, or 1,586 yuan per month, for a family's food, clothing, accommodation and transport. The expenditure was on a trend to further increase, therefore the individual income tax cutoff point was adjusted to 2,000 yuan a month.

(Xinhua News Agency December 23, 2007)