Adjustment could put fiscal pressure on local governments
Woods Lee 15 December 2008
Beijing will not raise the threshold for individual income tax as many people have hoped because it could seriously affect the fiscal situation of local governments in the less developed regions, mainland media have reported.
Many academics and think-tanks have been calling for a revision of the personal income tax threshold from the present 2,000 yuan (HK$2,300) a month to at least 3,000 yuan to stimulate domestic consumption. The idea has gained momentum in the face of the global economic slowdown.
Earlier, mainland media said a proposal jointly produced by the Ministry of Finance and the State Administration of Taxation had already been submitted to the State Council.
But the Economic Observer newspaper yesterday quoted “an authoritative source” saying that central government leaders did not discuss the proposal at last week’s central economic work conference as people expected. This means any adjustment in personal income taxes will not be likely in the near future.
The newspaper said Beijing was worried the adjustment could put pressure on local governments’ strained revenue incomes.
Beijing leaders also have doubts about how effective the adjustment could really be in boosting domestic consumption.
The central government has already announced a series of fiscal measures to help the nation battle a cooling economy, including a more lenient corporate value-added tax and more subsidies to low and medium-income households.
Some estimated that the new corporate added-value tax, which will come into effect from next year, could reduce the government’s income by 120 billion yuan.
Beijing also announced a huge stimulus package last month and promised to inject 4 trillion yuan into the economy to boost infrastructure, environmental protection, technology upgrades and social welfare. While the central government will foot some of the bills, local governments are also expected to share some burdens.
All these will eat into local governments’ revenues. Raising the personal income tax threshold again could further hit the state’s coffers, the newspaper said.
It quoted unnamed officials from the northeastern provinces as saying that if the starting point of personal income tax was revised up to 3,000 yuan a month, most residents living there would be exempted from paying tax.
Unlike rich provinces such as Guangdong or Zhejiang, many western or rustbelt provinces still rely heavily on personal income tax.
Sun Gang, a government economist from the Finance Ministry, said with the personal income tax threshold raised to 3,000 yuan, the number of people obliged to pay income taxes would fall to 7.4 million from 26 million.
Ni Hongri, an economist from the Development Research Centre affiliated with the State Council, told The Beijing News that about 60 per cent of mainland residents’ monthly salaries were below 3,000 yuan. He argued that adjusting the threshold would benefit highincome households more than low- and medium-income families.
NEW YORK, Dec 15 (Reuters) - Capital One Financial Corp, one of the largest issuers of MasterCard and Visa credit cards, said on Monday credit quality deteriorated in several areas of lending in November, as unemployment grew and the economy eroded.
In a regulatory filing, the company said the annual net charge-off rate for U.S. credit cards increased to 6.98 percent in November from 6.54 percent in October, while the rate for loans at least 30 days delinquent rose to 4.70 percent to 4.48 percent.
Net charge-offs reflect loans that a lender does not expect to be repaid.
In auto loans, the charge-off rate increased to 5.60 percent in November from 5.50 percent in October, while the delinquency rate rose to 9.48 percent from 9.14 percent.
In international operations, the charge-off rate fell to 5.17 percent in November from 6.15 percent in October, while the delinquency rate rose to 5.44 percent from 5.30 percent.
Citigroup supporter Prince Alwaleed reportedly lost $4 billion this year, according to a report of the richest Arabs, who collectively lost $25 billion during the financial meltdown. Those Citigroup and News Corp investments probably didn't help much.
AP via Yahoo: The pain is relative, of course. Prince Alwaleed bin Talal remains the world's richest Arab with a net worth of about $17 billion as of Dec. 2, Dubai-based magazine Arabian Business reported in its annual ranking. That is nearly twice as much as the second-richest on the list, but a considerable drop from the $21 billion the magazine said the prince was worth a year ago...
The Saudi royal's controlling stake in Kingdom Holding, which invests in well-known companies such as computer maker Apple Inc. and Rupert Murdoch's News Corp., accounts for nearly $8 billion of his wealth, the magazine said.
Alwaleed also owns Middle East media company Rotana Holding, and controls more than $3 billion worth of real estate, including a 124 acre personal resort complete with a private zoo.
And then there's the Airbus A380 "superjumbo" jet Alwaleed bought and had outfitted for his personal use. It's valued at $330 million -- a little less than the price tag for his other two jetliners combined.
Let's hope he doesn't have to sell the jet he refers to as a "flying palace."
3 comments:
Income tax threshold will not be raised
Adjustment could put fiscal pressure on local governments
Woods Lee
15 December 2008
Beijing will not raise the threshold for individual income tax as many people have hoped because it could seriously affect the fiscal situation of local governments in the less developed regions, mainland media have reported.
Many academics and think-tanks have been calling for a revision of the personal income tax threshold from the present 2,000 yuan (HK$2,300) a month to at least 3,000 yuan to stimulate domestic consumption. The idea has gained momentum in the face of the global economic slowdown.
Earlier, mainland media said a proposal jointly produced by the Ministry of Finance and the State Administration of Taxation had already been submitted to the State Council.
But the Economic Observer newspaper yesterday quoted “an authoritative source” saying that central government leaders did not discuss the proposal at last week’s central economic work conference as people expected. This means any adjustment in personal income taxes will not be likely in the near future.
The newspaper said Beijing was worried the adjustment could put pressure on local governments’ strained revenue incomes.
Beijing leaders also have doubts about how effective the adjustment could really be in boosting domestic consumption.
The central government has already announced a series of fiscal measures to help the nation battle a cooling economy, including a more lenient corporate value-added tax and more subsidies to low and medium-income households.
Some estimated that the new corporate added-value tax, which will come into effect from next year, could reduce the government’s income by 120 billion yuan.
Beijing also announced a huge stimulus package last month and promised to inject 4 trillion yuan into the economy to boost infrastructure, environmental protection, technology upgrades and social welfare. While the central government will foot some of the bills, local governments are also expected to share some burdens.
All these will eat into local governments’ revenues. Raising the personal income tax threshold again could further hit the state’s coffers, the newspaper said.
It quoted unnamed officials from the northeastern provinces as saying that if the starting point of personal income tax was revised up to 3,000 yuan a month, most residents living there would be exempted from paying tax.
Unlike rich provinces such as Guangdong or Zhejiang, many western or rustbelt provinces still rely heavily on personal income tax.
Sun Gang, a government economist from the Finance Ministry, said with the personal income tax threshold raised to 3,000 yuan, the number of people obliged to pay income taxes would fall to 7.4 million from 26 million.
Ni Hongri, an economist from the Development Research Centre affiliated with the State Council, told The Beijing News that about 60 per cent of mainland residents’ monthly salaries were below 3,000 yuan. He argued that adjusting the threshold would benefit highincome households more than low- and medium-income families.
Capital One card delinquencies rise in November
NEW YORK, Dec 15 (Reuters) - Capital One Financial Corp, one of the largest issuers of MasterCard and Visa credit cards, said on Monday credit quality deteriorated in several areas of lending in November, as unemployment grew and the economy eroded.
In a regulatory filing, the company said the annual net charge-off rate for U.S. credit cards increased to 6.98 percent in November from 6.54 percent in October, while the rate for loans at least 30 days delinquent rose to 4.70 percent to 4.48 percent.
Net charge-offs reflect loans that a lender does not expect to be repaid.
In auto loans, the charge-off rate increased to 5.60 percent in November from 5.50 percent in October, while the delinquency rate rose to 9.48 percent from 9.14 percent.
In international operations, the charge-off rate fell to 5.17 percent in November from 6.15 percent in October, while the delinquency rate rose to 5.44 percent from 5.30 percent.
Prince Alwaleed Lost $4 Billion This Year
Hilary Lewis
Dec 15, 2008
Citigroup supporter Prince Alwaleed reportedly lost $4 billion this year, according to a report of the richest Arabs, who collectively lost $25 billion during the financial meltdown. Those Citigroup and News Corp investments probably didn't help much.
AP via Yahoo: The pain is relative, of course. Prince Alwaleed bin Talal remains the world's richest Arab with a net worth of about $17 billion as of Dec. 2, Dubai-based magazine Arabian Business reported in its annual ranking. That is nearly twice as much as the second-richest on the list, but a considerable drop from the $21 billion the magazine said the prince was worth a year ago...
The Saudi royal's controlling stake in Kingdom Holding, which invests in well-known companies such as computer maker Apple Inc. and Rupert Murdoch's News Corp., accounts for nearly $8 billion of his wealth, the magazine said.
Alwaleed also owns Middle East media company Rotana Holding, and controls more than $3 billion worth of real estate, including a 124 acre personal resort complete with a private zoo.
And then there's the Airbus A380 "superjumbo" jet Alwaleed bought and had outfitted for his personal use. It's valued at $330 million -- a little less than the price tag for his other two jetliners combined.
Let's hope he doesn't have to sell the jet he refers to as a "flying palace."
Post a Comment