China is pushing to make consumer spending its next economic growth driver since its exports has slowed down and government infrastructure investment (mainly focused on housing and construction) has become ineffective.
Recently, an Economy professor from Sichuan Agricultural University published an article on how to get people to spend. He argued that it is difficult to get the high income groups and low income groups to spend more, so the focus should be on the middle income people. His suggestion was to impose a tax on the portion above 500,000 yuan (US$74,000) of people’s money in the bank.
In August 2021, another so-called “famous economist” Xu Hongbo from Wuhan University of Technology put forth a similar idea. A tax should be based on the total cash-equivalent of assets including bank savings, cash, gold (both gold reserve and gold jewelry), and money in the online payment accounts such as Alipay and Wechat. Assets below 1 million yuan would be exempt. Then 1 – 1.5 million and above would be taxed as follows: 1 percent for 1.5 to 2 million; 2 percent for 2 to 2.5 million; 3 percent would be for higher amounts, …, with 40 percent as the top tax rate.
Source: China Digital Times, January 27, 2023