Workers demonstrate moon cake making at the 11th Moon Cake Festival in Chengdu, Sichuan Province Sunday. A proposed moon cake tax has stirred much debate. Photo: CFP
Employees will have to pay a personal income tax on moon cakes offered by their employers this Mid-Autumn Festival, which has caused public dissatisfaction, but analysts said Sunday it's a type of fringe benefit tax that is reasonable, and could cut down on waste.
The moon cakes, which are Chinese bakery products traditionally eaten during the festival, are considered a non-cash employee benefit that are normally included with personal income, and consequently the tax might be imposed if total income exceeds the minimum personal income tax threshold, Xinhua News Agency quoted officials from Beijing Local Taxation Bureau as saying over the weekend.
The tax has proved controversial. "Aren't the moon cakes just traditional gifts for employees?" Wang Zheng, a 31-year-old IT worker, complained. "The over-packed moon cakes are already over-priced, if the tax is imposed, I'd rather get steamed buns from the company. At least that would be much more economical," Wang told the Global Times Sunday.
Moon cakes priced at 100 yuan ($15.65) to over 1,000 yuan for an eight-piece box always appear on city supermarket shelves right before the Mid-Autumn Festival, and packaging takes up over half of the total price.
"If imposed, I'd have to pay an extra 60 yuan of tax for the moon cakes, and that's too much," a microblogger on Sina complained, while more than 50,000 Weibo netizens have debated the topic over the past two days.
But a tax analyst said the tax should be considered as a type of fringe benefit tax. "It is reasonable," Zheng Xinye, a professor of the School of Economics at Renmin University of China, told the Global Times Sunday.
"Some companies provide employees with various products, including shopping cards, gas cards and even daily commodities, which are non-cash employee benefits, but most of the time taxes are not imposed, which is unfair for most taxpayers," Zheng said. "Also, not all companies will offer moon cakes to their employees."
Zheng admitted that currently the moon cakes were over-priced. "If a tax was imposed and fewer over-packed moon cakes were offered to employees, to some extent, it could reduce excessive waste," Zheng noted.
China was ranked second on the Forbes Magazine Global Tax Misery Index 2009, which covers personal, social security and other factors, but the Ministry of Finance and State Administration of Taxation have insisted time and again that the tax burden in China is still relatively low.
The public has complained about heavy taxes amid the current inflation level and low salaries.
"I hope the tax imposed on traditional gifts (moon cakes) could be lifted," Wang said. "At least it would improve the happiness index of our residents."