China’s tax cuts next year could rise above 1 percent of the gross domestic product (GDP), Ma Jun, a policy adviser to the People’s Bank of China (PBOC), told financial magazine Caixin, according to Reuters.
China’s GDP in 2017 totaled CNY 82.7 trillion, so a tax cut equal to 1 percent of GDP next year would be at least CNY 827 billion.
Ma also said that the tax cuts next year would be greater than the extent of US tax reduction.
On Saturday, Beijing published a draft version of new rules for tax deductions as part of a major overhaul of the country’s individual income tax law, which proposed:
- A deduction against the tax of CNY 1,000 a month for interest payments on home mortgages, and CNY 800 to 1,200 a month for rental payments.
- Deductions of up to CNY 12,000 per year for a child’s education, and up to CNY 60,000 per year for medical expenses above a base amount.
The policies are likely aimed at boosting consumption as the International trade’s contribution to GDP is likely to drop further in the coming quarters due to the ongoing trade war with the US.
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