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A new round of income tax adjustments have come into affect. An estimated 95 percent of Chinese wage earners will see their income tax reduced from 125 to 480 yuan a month. But calls are growing for more tax reforms to help with surging prices. CCTV Reporter Wang Yizhi has the story.

It's a typical lunch break in Beijing's central business district, but salary workers here will see some positive changes. From Wednesday on, their income taxes will be lowered. Based on new tax calculations, many wage earners will see reduced taxes, meaning more money in their pocket.

Lora Xue, Tax Payer, said, "At first I was quite happy about this. I've asked the human resources department. They said I'll receive 200 yuan more than last month."

Though people with salaries of more than 38 thousand yuan per month will have to pay more taxes, 95% of Chinese tax payers will enjoy reductions.

Dining in the CBD is not cheap, especially as inflation surges to its highest point in years. One worker spent 38 Yuan for take-out, much more than 3 years ago when she started working in the area. She believes the tax break has something to do with the rise in inflation.

"This is a quite positive measure. The government might think that inflation is quite serious and so are giving us some tax breaks. But I think the several hundred yuan may not solve some fundamental problems." Lora Xue said.

CCTV Reporter Wang Yizhi said, "On the first day of this round of tax adjustment, people like Lora are happy to expect a few hundreds more on their salary notice by the end of this month. But more still needs to be done to further reform the income tax system, to better cope with the inflation and other possible problems in the economy."

This is the country's third income tax adjustment since 2006. Wednesday's tax reforms also mean 60 million wage earners will be exempt from paying income taxes. Experts say the tax reforms are in accordance with the changing economy, but say the threshold should be raised on a regular basis.

Jia Kang, Director of Research Inst. For Fiscal Science, MOF, said, "I believe if the economy has reached a stable status, the income tax threshold can be raised once every 3 or 5 years. We can couple the prices with the income threshold, when consumer purchasing power shrinks and actual income decreases. It may be unnecessary for all these debates and consulting."

Experts believe that the new taxation framework is likely to be established during China's 12th five-year plan period by 2015.