China should cut corporate and personal income taxes to support the slowing economy amid a trade dispute with the United States, former Chinese finance minister Lou Jiwei said on Sunday.
“There is room for cutting the two (corporate and personal) income taxes,” Lou, now chairman of the National Council for Social Security Fund (NCSSF), told a finance forum in Beijing, Reuters reports.
China in October raised the threshold for collecting individual income tax to 5,000 yuan (US$720) per month from 3,500 yuan, hoping to boost consumption.
The government has also been cutting value-added taxes and fees for companies, but it has yet to lower a corporate income tax rate of 25 percent.
In other comments, Lou said China should not launch another round of large-scale infrastructure investment to spur growth, as such a move could worsen the country’s debt risks.
Local governments in China are already burdened by heavy debt, Lou noted, arguing that the government should instead use its fiscal tools to help defuse debt risks at financial institutions.
Government subsidies for social security funds nationwide reached 1.2 trillion yuan last year and are still growing quickly, he said.
China’s social security system is fragmented and unsustainable as its population ages, Lou said.
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