The document concerning a change to the method of taxing year-end bonuses, which the State Administration of Taxation (SAT) now claims to be fake, is, to say the least, an embarrassment to the administration.

The document carried by major papers and even Xinhua News Agency and People's Daily outlined a more reasonable format to tax on year-end bonuses than the current method, whereby a person who gets a year-end bonus of 6,000 yuan ($940) will pocket 5,700 yuan after tax is deducted, but will only get 5,425 yuan after tax if his bonus is 6,001 yuan.

Such abnormal cases often happen when year-end bonuses fall within close range of the thresholds at which tax rates increase on personal income.

The SAT announcement two days later that the document was a fake nipped the general public's change of heart towards SAT firmly in the bud, as residents had viewed the document as the way SAT intended to change the unreasonable way it calculates the tax on year-end bonuses.

Residents have enough reasons to ask for tax cuts.

Against the backdrop of the increasingly high CPI since late last year, the general public has become more and more concerned about how much tax they have to pay. And in response to growing calls for the government to raise the threshold for personal income tax, which has been 2,000 yuan since March 2008, the NPC has finally adopted an amendment to the tax law that will raise the tax threshold to 3,500 yuan.

Riding on robust economic growth, China's government revenues have increased rapidly in recent years. The country collected more than 8 trillion yuan in fiscal revenues in 2010, up 21 percent over the previous year. And in the first seven months of this year the country's government revenues have already reached more than 6 trillion yuan, an increase of more than 30 percent compared with the same period last year.

It is more than obvious that the State coffers are in a position to afford a tax cut.

Many believe even though SAT has declared the document a fake, it is time for it to admit that there is problem with the tax calculation method for year-end bonuses, which has time and again made some people who get higher year-end bonuses actually pocket less after tax than others who are given Ismaller bonus.

SAT should organize a thorough investigation to find out who has forged and issued the false document and then inform the public.

Furthermore, the SAT needs to explain to the public why it continues to use the unreasonable calculation method and why the fairer method proposed in the document cannot be implemented.

(China Daily 08/17/2011 page8)