Text b. Return to sender Beijing

In China death is certain but taxes often optional

The well-to-do in China have snubbed their government. This year for the first time, anyone earning more than 120,000 yuan ($15,000) annually is supposed to file a personal income-tax return. Yet by the deadline of April 2^nd (extended by a couple of days because of low compliance), only a small minority had done so. Threats of massive fines have gone unheeded.

The government’s embarrassment was evident when it missed its own deadline of April 10^th for announcing the total tally of tax returns completed. But officials have estimated the number is around 1.6 m. The number of those required to file is widely reported to be 6m-7m and could well be much higher. Those who have done so already are mostly wage-earners who have tax deducted from their salaries and feel they have no option but to report their incomes because they are already in the tax authorities’ records.

A big difficulty for tax officials is that even some of the government’s own media have broken ranks and suggested that the middle classes’ obvious disdain for the new requirement may not be unreasonable. Confusingly, the annual tax return does not supersede an existing monthly requirement to report and pay tax on non-taxed income if total earnings exceed a certain threshold. A newspaper run by the state prosecutor’s office argued that the tax administration had no legal authority to fine people for failing to fill out returns relating to income on which they had already paid tax.

But very few bother to pay personal income tax unless it is deducted automatically. As some Chinese newspapers have pointed out, this is partly because many Chinese believe they get little in return for their taxes. They have to pay through the nose for health care and for decent education for their children. They are also resentful that few officials pay tax, even though many have big incomes ffrom shady dealings.

Even the words “no taxation without representation” have found their way into print, in an article in the Information Times, a government-owned newspaper in the southern city of Guangzhou. Nothing that half of the delegates of China’s legislature were officials, the newspaper reported that commentators had pointed out that the parliament should have “fewer officials and more taxpayers”: an interesting distinction suggesting the taxman has struck a raw nerve.

(The Economist April 14^th 2007)

Text c. Womenomics revisited

If more women were in paid work, the world could be much richer

Men like to believe that they run the world. They are not deluding themselves. In politics, men still dominate most of the planet’s governments and legislatures. In economic life, they rule its boardrooms and have most of the best-paid jobs. Women, meanwhile, do by far the greater part of the world’s unpaid work. Granted, some details of the canvas are changing: women’s share of the workforce is much higher than it was a generation ago, and they comprise the majority of university students in some countries. Nevertheless, it is still a man’s world.

And a wasteful one. Were more women in paid employment, according to a run of recent studies, the world would be better off. The waste is surely worse in poor countries than in rich ones. A report this week by the United Nations Economic and Social Commission for Asia and the Pacific concludes that sex discrimination costs the region $42 billion – 47 billion a year by restricting women’s job opportunities. A gap of 30-40 percentage points between men’s a women’s workforce participation rates is common. The poor state of girl’s education costs a further $16 billion-30 billion. And those are just the economic costs, before violence against women and access to health care are counted.

But rich countries undervalue women as well. Just look at the gap between male and female employment rates in America, Japan and western Europe, as Kevin Daly, an economist at Goldman Sachs, does in a recent study. In Sweden, where around 70% of females aged 15-64 are in work, the gap is less than five percentage points. In America and Britain it is around a dozen points. In Italy and Spain it is over 20 points. Suppose, says Mr Daly, that women’s employment rates were raised to the same level as men’s; and suppose, that GDP rose in proportion with employment. Then America’s GDP would be 9% higher, the euro zone’s would be 13% more, and Japan’s would be boosted by 16%.

That may be a bit of an overstatement. Add so many people to the workforce and average productivity would probably fall. Given the chance to work, many women may do so part-time rather that full-time; some men with working partners may make the same choice. Nevertheless, the boost to GDP would still be substantial. Mr Daly notes that were euro-zone productivity raised to American levels – a commonly cited idea – the single currency club’s GDP would rise by only 7%.

You might object that looking at GDP itself overstates the benefits. With more women in work, some of what they now do unpaid – caring for children, cleaning, preparing , meals – would be bought in. So some work would be counted, and added to GDP, simply because it was supplied in the market not the home. True, says Mr Daly, but only to a limited extent. Pay in child care tends to be low, so the offsetting factor is not very great. Even in Sweden pre-school care accounts for only 1.2% of GDP, a small sum compared with the gains on offer.