“Residents only pay 111 RMB/month for housing” Says China Statistics Bureau

| May 5th, 2011

From 21st Century Economic Report via Yahoo

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Statistics Bureau said Chinese monthly expenditure of residential housing is 111 Yuan, which caused controversy

Key information: the result issued by China Statistics Bureau recently shows that the average monthly expenditure of one citizen is 1,123 Yuan, among which housing expenditure only costs 111 yuan, lower than expenses of food, transportation, communication, education, entertainment and clothing.

Is 3,000 personal income tax exemptions too high or too low?

According to the Ministry of Finance and the State General Taxation Administration, the zero bracket amount of personal income tax is going to rise from 2,000 to 3,000 Yuan, resulting in 99 billion tax losses. The percentage of people who are due to pay taxes is reduced by 12%.

But the proposal is quite different from the previously anticipated 5,000. The focus of controversy is that the personal income tax is meant to reflect the status of economic development and residential income level, but it is now charged too much for people living in metropolises with high consumption and high inflation.

Prof. Liang Junjiao from Central University of Finance Tax Institute thinks that the point of contention is no longer the nature of zero bracket amount, which in her mind should also include basic cost in daily life.

Controversy in 111 Yuan monthly housing expenses

The international accepted principle of personal income tax legislation is that the basic living cost should not be taxed. So the question is, can 3,000 Yuan cover the whole basic cost of city residents?

According to the explanation of Ministry of Finance, the figure 3,000 is calculated by the Statistic Bureau through the GNP index. In 2010, average monthly expenditure is 1,123 Yuan per person, concerning that every working person with job supports 1.93 persons, the monthly expenditure will be 2,167 Yuan for those who have jobs. Given 10% average increase, the final monthly expenditure should be 2,384 Yuan. And the draft enhanced it to 3,000 Yuan.

And people’s controversy is focused on how to calculate out the 1,123 Yuan.

China Statistics Bureau issued their statistic results which showed that among the 1,123 Yuan, food costs 400 Yuan, transportation and communication cost 165 Yuan, education and culture entertaining service cost 136 Yuan, and clothing costs 120 Yuan. However, the housing expenditure is only 111 Yuan, ranking in the last.

Even if people can find places to live with 111 Yuan per month, the ranking order is obviously different from what the public feels. “It’s obviously unacceptable,” Liang Junjiao says, “In either first tier city or the second tier city, the housing expenditure is actually the biggest part in daily expenses and is also the main reason to cause different consumption levels in different places.”

But how is the expenditure calculated? Peng Zhilong, chief of accounting division in Statistic Bureau explains that the calculating method in GNP and CPI is quite different. The housing expenditure in CPI includes gases, building house and decoration, loan interest rate, property fees and rent, while that in GNP is the sum of house repair, depreciation and property fees, a little smaller than the scope in CPI.

And the depreciation in GNP is a reflection of rent. Sheng Laiyun, the media spokesman of China Statistics Bureau explained that when calculating the rent, they didn’t take the market changes into account, but rather adopted housing cost depreciation. Recent years, the housing price surged in China, thus the method adopted by the Statistic Bureau can surely lead to a discrepancy.

“The 1,123 Yuan basic living standard can cover clothing, food and transportation, but cannot cover living expenses for sure,” said Liang, “whether 3,000 Yuan truly revealed the living expenses or not is the key point of debating.”

Mrs. Liang also gave a suggestion: we can exempt housing expenses from personal income taxes, that is to say, people pay taxes after deducting basic living cost and housing expenditure according to one’s proof of living expenses. “That can resolve the problem through the nation that housing expenditure is different in many places. Even if the real estate price changes in the future, the government can deduct the housing expenditure properly as well, and avoid modifying the standard of zero bracket amount frequently.” Liang also said that: “Because we have now launched housing network, controlling the housing expenditure will meet no technical obstacles.”

2 Comments | Leave a comment | Comment feed

  1. Curren$y says:

    Yea if you living in a mud hut.

  2. Gary says:

    Is that the out of pocket housing expense for government employees of the Statistics Bureau?

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