The government should adjust the current tax system, says a signed article in Beijing News. An excerpt follows:

The country's financial revenues from January to April this year surpassed 1.5 trillion yuan (US$187.5 billion), a year-on-year increase of 22 per cent.

However, facing such an inspiring figure, Vice-Minister of Finance Lou Jiwei recently expressed concern over structural problems in economic growth.

A few years ago, renowned economist Wu Jinglian said the country's tax system should bear a great responsibility for the ongoing economic growth model.

The country has adopted a production-based tax system in which enterprises should pay tax for any business activities, no matter whether they can make a profit.

Such a tax model has encouraged local governments to adopt a host of pro-business policies to attract outside investment and expand their tax sources.

To stop businesses leaving some regions, local governments even relax their environmental standards or connive with employers to keep workers' wages artificially low.

In this situation, local governments have harvested bumper revenues from the rapid growth of gross domestic product (GDP), which is a result of endless projects and investment.

Such a model of economic growth driven by preferential government polices has naturally favoured the government and enterprises, while ordinary people have not enjoyed much from the expanding revenue cake.

The best indicator gauging government income is the proportion of its tax to GDP. From 1994 to 1996, 7.2, 7.8, and 9.3 per cent of newly increased GDP was converted to government tax every year. However, the average proportion was raised to as high as 27.41 per cent from 1997 to 2003. That means that nearly one-third of newly created GDP was turned into government revenues.

Adjusting or reforming the current tax system is the key to solving this problem. Only by doing this will the government be able to increase the incomes of ordinary people.