A Chinese financial expert says China should further raise its income tax threshold in order to boost domestic consumption amid the global economic downturn.

Yang Zhiyong, a scholar with the Chinese Academy of Social Sciences, says China's current steady increase in its annual fiscal revenue signals the right time for the country to do so.

"So far income tax occupies about 7% of China's total tax revenue. If the threshold is raised to 3000 Yuan from the current 2000 Yuan or about 300 US dollars, it will not affect the country's total tax revenue. Less income tax means more money at disposal for the people. It will help to boost consumption."

In March this year, China raised its income-tax threshold to 2000 yuan from 1600 yuan.

Chinese financial experts believe that a worsening global financial situation has raised the prospect that income-tax threshold may further rise next year.