7-11-05,9:38am

BEIJING -- The widening income gap was the most serious social problem in China in 2004, according to a recent survey conducted by the Party School of the Communist Party of China (CPC) Central Committee.

The survey also found that reform of the income distribution system in 2005 is the top concern of the respondents, including officials at the provincial level, Xinhua Telegraph Daily reported Friday. “Irrational income distribution is the main cause of widening gap between the rich and the poor”, the paper quoted Peng Zhao, a member of the Standing Committee of the National Committee of the Chinese People’s Political Consultative Conference, as saying.

Statistics showed that the ratio of the average annual disposable income between urban and rural citizens stood at 1:3.23 last year, compared with 1:2.57 in 1985.

Rural residents with low income, or 865 yuan (104 US dollars) per person a year, number 90 million, accounting for 10 percent of the country’s total rural population.

An Qiyuan, another CPPCC member, said that the income gap between different social sectors is also wide. Those working in some monopolized industries, such as power, water and gas supply units, telecommunications, air and railway transportation, enjoy much higher salaries than those working in other industries.

The income gap between those poorly-paid and highly-paid industries increased by 4.25 times last year, against 3.98 times in 2003 and 2.62 times in 2000.

There is a cry for breaking the monopoly of these industries to narrow the income gap.

Meanwhile, Peng called for improvement of the country’s personalincome tax collection system.

It is reported that 80 percent of the country’s personal income tax came from salary earners, while tax evasion is common among “rich people”, as it is difficult for tax collection departments to control and identify the actual income of the rich because of their diversified income sources.

“The role of the personal income tax in adjusting income distribution is decreasing, which results in great losses for the state coffer,” Peng said.

The two CPPCC members proposed to improve the tax collection system and readjust the existing minimum amount of personal incometo be exempted from taxation, which has been standing at 800 yuan for 20 years.

They also called for the establishment of a sound public financial budget system and a monitoring system. Banks, financial, auditing and taxtion departments are urged to play a supervisory role to make the distribution system “more fair and reasonable.”