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sheng songcheng file photo. at the "2024 global asset management center evaluation index release and clf50 autumn meeting", professor sheng songcheng, professor of economics and finance at ceibs and senior academic advisor to ceibs lujiazui international finance institute, focused on the theme of "some thoughts on fiscal and monetary policy support for consumption", deeply analyzed the main contradictions in the current economic operation, and put forward a series of policy recommendations that are both targeted and operational, providing new ideas for boosting consumption and promoting steady economic growth. source: ceibs

sheng songcheng: it is recommended to appropriately increase the personal income tax threshold and reduce the personal income tax rate for middle- and low-income groups

appropriately raise the threshold for individual income tax

at present, the threshold for individual income tax in my country is 5,000 yuan, that is, the amount below this standard is exempt from taxation, while the amount above this standard is subject to taxation according to law. assuming that we raise the threshold for individual income tax from 5,000 yuan to 8,000 yuan, it is estimated that tax revenue may decrease by about 30 billion yuan per year, which actually only accounts for 0.17% of the total tax revenue in 2023, and has little impact on the overall fiscal situation.

however, this seemingly minor adjustment can produce significant socio-economic benefits. it will directly benefit the vast middle- and low-income groups and significantly increase their disposable income levels. compared with short-term, one-off consumer vouchers or cash subsidies, the income increase brought about by raising the personal income tax threshold is more lasting and stable. by reducing the tax burden on middle- and low-income earners, we can effectively stimulate their consumption potential, because this group is more sensitive to income changes, and the additional income can often be quickly converted into consumer spending.

reduce personal income tax rates for low- and middle-income groups

under the current economic situation, people with an annual income of less than 350,000 yuan are the backbone of the consumer market, and their consumption capacity plays a vital role in activating the market and promoting economic growth. therefore, it is also possible to consider moderately lowering the personal income tax rate for this income group.

at present, my country implements a progressive tax rate system of 10% to 20% for groups with annual income of 100,000 to 350,000 yuan, that is, the tax rate for the 100,000 to 200,000 yuan range is 10%, and the 200,000 to 350,000 yuan range is 20%. if the tax rate for the 100,000 to 200,000 yuan range is reduced to 5%, and the 200,000 to 350,000 yuan range is reduced to 15%, it is estimated that the annual tax revenue will be reduced by about 100 billion yuan.

it is true that raising the individual income tax threshold and lowering the tax rate for low- and middle-income people may put some pressure on the fiscal budget in the short term. however, in the long run, with the steady growth of the economy and the continuous improvement of residents' income levels, the tax base will continue to expand, thus effectively compensating for the short-term fiscal losses caused by tax cuts.