Chinese tycoon Zong Qinghou asks government to cut taxes, warns instability

BEIJING: China's second richest man, Zong Qinghou has asked the government to cut taxes to boost growth and said levying high taxes could cause instability within the society.

"Many small- and medium-sized enterprises cannot survive without tax evasion, which led 20 per cent of businesses to pay 90 per cent of the nation's taxes," Zong told a group of economists and entrepreneurs at Yabuli China Entrepreneurs Summer Summit, held in Zhengzhou in north central China.

He suggested that the income tax threshold should be raised to 10,000 Yuan (about $ 1700) which would help to increase people's income. China's current income tax threshold is 3,500 yuan (about $ 600).

Zong, 68, who figured second in latest Forbes China Rich List is estimated to have been worth about $ 11.2 billion.

He heads China's leading beverage maker, Hangzhou Wahaha Group. He warned that continued heavy taxation could cause instability within Chinese society.

If the nation is rich, but people are poor, the country cannot be strong and society will be unstable," Zong was quoted as saying by the South China Morning Post today.

It is rare for a Chinese businessman to criticise government's policy in public.

He said that the government's expenditure on "maintaining stability" had "greatly exceeded" its revenues.

"If ordinary people's income were increased, [everybody] would live a happy life and society would be stable. There would be no need for [the government] to have to try to maintain stability," he said.

He also said that 51 per cent of the national revenue was spent on running the government.

Zong said he was optimistic about China's economic outlook, saying he believed the mainland's rapid growth momentum would continue for another 20 years.