China's wealthy face higher taxes

China announced a new tax on its richest citizens yesterday in an attempt to prevent wide disparity in earnings. The New China News Agency said more and more people were earning extra income because economic reforms allowed limited free enterprise and this had strained the supply of goods.

``The current policy of encouraging people to get rich will continue. But still there must be a new tax to prevent the income gap from becoming too wide,'' the news agency said.

The agency said the rate would vary in 11 different areas, taking into account variations in living conditions and prices.

Official figures show the average urban income last year at $203 a year, with average rural incomes slightly more than half that. The richest people in China are private businessmen who dominate the service trades.