BEIJING - If he had been given a choice, Li Jingyuan would not have accepted the mooncakes his employer gave him as a gift for the upcoming Chinese traditional Mid-Autumn Festival which falls on September 12.
Accepting the supposedly free box of mooncakes bumped Li into a higher tax bracket as its 300-yuan (about $47) cost was added to his monthly personal income.
"I actually earned 6,800 yuan in August, meaning I should pay 720 yuan in tax. But the mooncakes took my total income to above 7,000 yuan and I was taxed 1,020 yuan," said Li.
Li joined a leading state-owned petroleum company based in Beijing earlier this year. He'd never received mooncakes as a gift from former employers and did not expect his new company's generosity to bring bitterness.
"As the western saying goes, nothing is certain but death and taxes. I feel very uncomfortable about the 'mooncake tax,'" Li said.
The Mid-Autumn Festival is celebrated on the 15th day of the eighth month in the Chinese lunar calendar. It is when the moon is supposedly at its fullest and brightest and families come together and eat mooncakes -- a traditional stuffed pastry.
A spate of complaints have emerged after the Legal Evening News last Friday published an article that quoted Beijing tax authorities as saying that mooncakes given as gifts by companies to their staff are taxable as part of employees' in-kind income in accordance with the country's personal income tax law.
The tax is not new. Chinese law has long stipulated that one's income, including cash, in-kind gains and securities, are taxable, and their market value should be counted into one's taxable income.
But a lot of Chinese are unaware that gifts from their employer such as mooncakes are categorized as an in-kind benefit. Many did not know if they'd ever been taxed for receiving such gifts and some local tax authorities did not strictly enforce the tax.
More importantly, many people are angry about the so called "mooncake tax" as they view it as unreasonable.
According to a poll conducted by Weibo -- China's Twitter-like microblogging service -- in which 19,000 Internet users had participated by Wednesday night, 92 percent of them objected to mooncake gifts being taxed.
"It is supposed to be a pleasant time to eat the mooncake under the full moon. But isn't it sad when you realize the 'gift' cost you hard-earned money?" said Weibo user "fenchun."
"Now that even mooncakes are taxable, I prefer cash and shopping cards from my boss as holiday gifts because mooncakes are often over packaged and cost more than their real value," said Li Mao from the northern city of Shijiazhuang, capital of Hebei province.
The public outcry over the "mooncake tax" could prompt the government to reflect on its tax principles, said Xia Xueluan, a sociology professor with Peking University.
However, tax experts said the taxation of mooncakes will not hit many low-income workers in the pocket, as those who earn less than 3,500 yuan ($548.5) per month will not be required to pay income tax as of Thursday.
In late June, China's national lawmakers raised the country's monthly tax exemption threshold to 3,500 yuan from 2,000 yuan, reducing the number of individual income tax payers from 84 million to 24 million.
