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China plans new social security tax

BEIJING: China plans a new social security tax to cover a huge funding shortfall at a time when large numbers of state workers are being laid off, the China Daily Business Weekly reported on Sunday.

The new tax was agreed upon after hot debate within government ministries, the paper said, without giving any details of the levy or saying when it would be implemented.

"The decision has been made although it is still controversial," the newspaper quoted an unidentified ministry of Labour and Social Security official as saying.

Chinese enterprises owe 38 billion yuan ($4.6 billion) in unpaid pension contributions, the paper quoted labour ministry figures as showing.

Government plans call for five million state industrial workers to be laid off this year, adding to the 6.5 million officially registered as urban jobless.

Social security funds are now topped up by contributions from workers and enterprises, and the paper said debate was focused on whether the new tax should replace the existing system or supplement it.

Existing funding arrangements are unevenly applied, leading to different levels of security in different parts of the country, the paper quoted Ji Jinbao, a professor at the Central University of Finance and Economics, as saying.

In addition, fund-raising was haphazard and lacked legal safeguards, which led to corruption. -Reuters