Beijing Minimum Wage Hike

[roddy]

Beijing has bumped the minimum wage for residents from 800Y a month - just under 120USD - to 960Y - about 140USD. The minimum hourly rate for part-timers is going up to 11Y, from 9.6Y.

Still seems mighty low, although low-paying jobs will often 包住宿 - include accommodation and food. I'll probably need to feel at least a little more guilty next I'm picking up a three-figure restaurant bill and going on for 50Y drinks.

[jbradfor]

I don't have a reference (too lazy), but didn't Foxconn just announce a 20% (or was it 30%) wage hike at their Shenzhen plant to offset the criticism over the suicides?

Seems inevitable that China will lose its low-cost status over the next 5-10 years. The eventual re-evaluation of the renminbi will only exasperate that.

[gougou]

I'll probably need to feel at least a little more guilty next I'm picking up a three-figure restaurant bill and going on for 50Y drinks.

On the other hand, you're also keeping some of these people in a (albeit low-paying) job.

Seems inevitable that China will lose its low-cost status over the next 5-10 years.

Absolutely. This trend's already been noticeable in the more cost-sensitive industries such as textiles, where lots of companies moved on to for example Vietnam. A lot of European companies also changed from off-shoring to "near-shoring", bringing operations from China to Eastern Europe which, while still a bit more expensive than China, they found more easily manageable.

In the near future, the Chinese government will want to stay cheap (as can be seen from their unwillingness to let the CNY appreciate), but the long-term strategy definitely is to get away from being the world's workbench and create some strong companies and brands.

[gougou]

At least 20 provinces are expected to follow suit (or have done so already) this year.

Interestingly, Shanghai's minimum wage goes up from RMB 960 to RMB 1120, but hourly wage only up to 9 yuan. So if you work by the hour, you're still better off in Beijing...

[Erbse]

I have a hard time believing anyone can live on 960 in Beijing, unless he lives in a rat hole or beyond the 7th ring road.

[gato]

A thing to keep in mind social services for low wage workers are minimal in China. The government provides medical care and pension only to government workers. Those who work for the private sector are supposed to be covered by their employers, which typically means that low-wage workers have no coverage. The government doesn't even really provide free education for all. For those without hukou in the big cities, parents are expected to pay out 10000-20000 a year in tuition. Low-wage workers are expected to do quite a lot with their 980 a month.

On the other hand, money earned from the stock market is entirely exempt from tax, and money earned from selling a house is typically taxed at only around 5%.

The government needs to start taxing the rich and provide more social services. The problem is the poor aren't represented in the government, but the rich are.

[jbradfor]

I have a hard time believing anyone can live on 960 in Beijing, unless he lives in a rat hole or beyond the 7th ring road.

What's the monthly cost for a bed in a Worker's Dormitory? [This is a real question, I have no idea, but I expect it's really cheap, if not free, provided by the company.]

[gougou]

As roddy said, many companies will provide food and accomodation. Everything you earn could basically go towards your savings (i.e. your family back home) - if you don't gamble or go to prostitutes, that is...

Local Beijingers will usually have their own accomodation, and assuming both partners got minimum wage would have about 2000 to cover a month - that's definitely possible. I could live on that if I wanted to, and I spend much less time bargaining for that last mao.

[roddy]

A bed in a shared underground room not too central could be had I'd guess for a few hundred a month. But to be honest I suspect it's more normal than not for the lower-paying jobs to include accommodation and food - even if that just means letting staff sleep on the floor after closing up and supplying a bit of rice and veg.

[Brian US]

I was invited last year to move in with a Chinese student and his 6+ roommates. He said rent would be 250 kuai a month, so I assume bunk beds. The argument of minimum wage in America is sometimes referred to as a "living wage" in order to meet what many perceive as a "fair wage."

Anyone know much about undocumented workers? I'm sure there are many working for under minimum wage.

[gato]

More strikes after people see the pay increases at Foxconn and Honda.

http://www.nytimes.com/reuters/2010/06/10/news/news-us-china-labour.html?hp

China Labor Unrest Spreads as Workers Seek More

By REUTERS

Published: June 10, 2010

[gougou]

On the other hand, money earned from the stock market is entirely exempt from tax, and money earned from selling a house is typically taxed at only around 5%.

Let's see what we can do about that...

[gato]

Let's see what we can do about that...

We will see if this new notice about strictly enforcing tax rules for high-income earners is just empty talk. If they were serious, they would repeal the current tax exemption for profits from selling a house or the tax exemption from selling shares on the Chinese stock market. But they haven't yet.

Here is the 2006 regulation issued by the National Tax Bureau that is currently in effect that allows profits on selling a house to be taxed at a very low rate (typically around 5%). This latest June 9 notices refers to this rule but does not change it.

http://www.gov.cn/zwgk/2006-07/27/content_347120.htm

国家税务总局关于个人住房转让所得征收个人所得税有关问题的通知

国税发〔2006〕108号

二、对转让住房收入计算个人所得税应纳税所得额时，纳税人可凭原购房合同、发票等有效凭证，经税务机关审核后，允许从其转让收入中减除房屋原值、转让住房过程中缴纳的税金及有关合理费用。

　　（一）房屋原值具体为：

　　1.商品房：购置该房屋时实际支付的房价款及交纳的相关税费

　　三、纳税人未提供完整、准确的房屋原值凭证，不能正确计算房屋原值和应纳税额的，税务机关可根据《中华人民共和国税收征收管理法》第三十五条的规定，对其实行核定征税，即按纳税人住房转让收入的一定比例核定应纳个人所得税额。具体比例由省级地方税务局或者省级地方税务局授权的地市级地方税务局根据纳税人出售住房的所处区域、地理位置、建造时间、房屋类型、住房平均价格水平等因素，在住房转让收入1%-3%的幅度内确定。

This 2006 regulation says that profits from sales of a house should be taxed at 20%, as should be true for all property sale-derived profit under the tax law. At the same time, the regulation provides a big exemption from the 20% tax by saying that if the seller cannot provide evidence of the original purchase price for the property (entirely up to the seller to determine), then the tax can be just 1-3% of the selling price to be set by the local governments. In Shanghai this "no documentation" rate has been set at 1%.

So if you bought a house last year for RMB 3 million and are now selling it for RMB 4 million a year later, with a profit of RMB 1 million, you are free to choose between two tax rates:

(1) normal rate: RMB 1 million x 20% = RMB 200,000; or

(2) "no documentation" rate: RMB 4 million x 1% = RMB 40,000 (40k is only 4% of the 1 million in profit)

The regulation allows the seller to freely choose whether or not to provide the documentation for the original purchase price. Obviously, the seller's going to do a little calculation and choose the lower of the two. This is, of course, an intentional loophole. The tax bureau is not stupid. They probably didn't feel it was politically feasible to exempt the profit entirely, so went for this "no documentation" under-the-table rate reduction.

Here is the regulation that exempts profits from the sale of stock from income tax. This exemption has been in effect since 1994. There is no talk yet of repealing the exemption.

http://www.chinatax.gov.cn/n480462/n480513/n480979/n554154/1002991.html

财政部　国家税务总局关于股票转让所得暂不征收个人所得税的通知

财税[1994]40号

成文日期：1994-06-20

各省、自治区、直辖市人民政府，国务院各部委、各直属机构：

　　按照1993年10月第八届全国人大常委会第四次会议通过决定修改的《中华人民共和国个人所得税法》的规定，股票转让所得应征收个人所得税。1994年1月国务院发布的《中华人民共和国个人所得税法实施条例》中明确，对股票转让所得征收个人所得税的办法，由财政部另行制定，报国务院批准施行。鉴于我国证券市场发育还不成熟，股份制尚处于试点阶段，对股票转让所得的计算、征税办法和纳税期限的确定等都需要作深入的调查研究后，结合国际通行的做法，作出符合我国实际情况的规定。因此，经国务院同意，决定今明两年对股票转让所得暂不征收个人所得税。

财政部　国家税务总局关于个人转让股票所得继续暂免征收个人所得税的通知

财税[1998]61号

成文日期：1998-03-30

　　为了配合企业改制，促进股票市场的稳健发展，经报国务院批准，从1997年1月1日起，对个人转让上市公司股票取得的所得继续暂免征收个人所得税。

Well, it looks like the tax bureau in Jinan, Shandong has started to disallow the 1% "no documentation" tax rate on profit from sale of a house. Hopefully, the National Tax Bureau will issue a national repeal of the 1% rate soon.

http://news.qq.com/a/20100326/001695.htm

济南二手房严征20%个税 投资抛售成本将加大

2010年03月26日13:10舜网-济南时报刘研波

以前二手房交易个人所得税方面，我市执行的是按总房价1%缴纳或者按照买卖差价20%的税率缴纳政策，两种方式市民可选其一。

从昨天起，济南住房个税征收政策发生根本性变化，原先因难以确定原购房价值，而一直对新售价按核定税率1%征收的政策，因原购房价值信息已基本被税务部门掌握，而改为按销售差价的20%税率征收。该政策在炒房一族和房产中介中激起千尺浪。

济南市地税局住房交易办税服务大厅科长季宏介绍，按照国家税法规定，销售住房收入属个人所得税征收税目“转让财产所得”之内，应按差价(本次交易金额减去房子原值)的20%征收，但多数纳税人不能或不愿提供原购房发票，税务部门无法确认房子原价，所以我市一直以来一般按房产销售价格的核定税率1%征税。由于房价上涨速度过快，业户赚取的差额巨大，而这种征收方式缴纳税款普遍偏低，在这种情况下，许多能提供原房购房发票的售房业主过户时也不愿提供。

近日，税务部门加强与房管部门合作，借助其信息平台，能轻松看到多数过户房产的原购房发票、契税缴纳证明等资料，实行按差价20%征收的条件成熟。因此决定执行按差价20%征收房产个税的政策。

[dumdumdum]

i used to live on less than 800rmb a mth in my university days in china. the school provide a 2-person foreign students room, its more than survivable, and i got 30 boxes of books(20kg each) to send back home after my graduation. even till 2008. i still came across japanese living on less than 1000 rmb a mth, of cos with lodgings provided by school.

but at the same time i saw some who spent 1000usd a mth and still not enough. depends on how individuals measure their 'quality of life'.

i was wondering the new minimal wage thing applies to 'local employees' only, or does it cover the large semi-employed rural population that roamed the big cities looking for jobs. from my experience such things usually dont cover the latter. just like beijing or shanghai reporting 'average income' per month is roughly 2000rmb, they dont include the 10mil 'mobile population' in each of the 2 cities, instead just those with local resident status and therefore is some distance away from reality.