BEIJING -- China's reform on individual income tax will release enormous consumption potential, facilitating the country's economic growth, a recent report showed.
The tax reform will increase consumer spending by 717.6 billion yuan (about $107.2 billion), said a report on China's economic security by Liu Wei, president of Renmin University, and Su Jian, an economist with Peking University.
Middle- and low-income groups benefit from the reform in particular, with urban residents with monthly income below 10,000 yuan enjoying tax cuts of more than 60 percent.
The reform is also estimated to expand the share of urban employees exempted from individual income tax by 26.32 percentage points, according to the report.
As consumption is becoming a major momentum for economic growth, China should continue to boost domestic demand by increasing disposable income's proportion in the GDP, enhancing social security and encourage product innovation, the report added.